Wednesday, March 07, 2007
Google? Google!
Do you google? A lot of us Google, an estimated 80% do at least. Some estimates rank Google as high as 90%; foolproof, 100% numbers are impossible to obtain because such competitiveness between the big three search engines, MSN, Yahoo and Google. Back to Google. You wouldn’t believe what a trendsetter this company happens to be, just check out the stock chart.
Google, besides it 500% return since its IPO has been a rather boring company, seriously. This stock has touched the same two trend lines twelve times between the two and has remained a fairly constant mover amongst a sea of undecided stocks. Google has always marched to the beat of its own drummer, and I would expect nothing more from it.
Quite frankly, fundamentally, this stock is the worst on the market. Growth rates, brand strength, blah blah blah. Yahoo and MSN have entered online text advertising, a market once held nearly 100% by Google. At this point, Yahoo and MSN should have the same valuations as Google. Yahoo isn’t even close and MSN is a part of Microsoft. Simply, buy Yahoo for the fundamentals.
But for you techies out there :D we like seeing those boring stocks that move back and forth between a set or prices. Google is one of those that does, and has moved between two trend lines nearly perfectly for the last two plus years, since its inception. There are a few theories I have proposed as to why this trendline, the bottom one, is so strong.
First, institutional buyers. Institutional buyers generally trade long term technical plays like that of Google. Its all about generating cash flow for their investors and while providing a liquid portfolio. The private equity sector is a large buyer of Google, as I would expect. Stanford university, among others, is another very large holder of Google. The venture capital company which brought Google to the masses is still holding to its large chunk of the online advertising mogul. From the institutional side, ie the people who actually move the markets, no one is selling nor would I expect them to do so.
Second, this is a very old line. Its not some intraday trend drawn up by a day trader on the one minute charts. Since this line started at the beginning of the company, investors believe the line to be more credible. And they should, this is all the stockholder of Google has ever seen. You don’t know something until you’ve seen it, and at this point it seems as though this stock will trade up forever.
Third, this is an extremely measured pace. Using some slope algorithms I learned in the fourth grade I have concluded that this stock has moved up $16.67 every month on average, according to the bottom trend. That’s a nice ROI in my book.
Ta da! A nice pretty chart with lines. A picture really is worth a thousand words, or at least one thousand dollars.
Play the trends my friends. The trend is your friend, and when it bends, CASH it IN! Take the trend and run with it. This isn’t going to end soon, as you can see google has already made a bounce off the bottom line and is headed back for $500. Don’t miss the boat, but for the long term, Yahoo is the internet play!