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I think that a "should" statement is a bit inapplicable. Investors may choose a different stock if they don't like the particulars of Alphabet. It has some si

I think that a "should" statement is a bit inapplicable. Investors may choose a different stock if they don't like the particulars of Alphabet. It has some significant downsides: founders owning 10% of equity but having a majority of votes; large investments in ventures unlikely to succeed (Fiber, Calico).

hueving 10y ago
"should" from a market efficiency standpoint. By being an all or nothing proposition, it makes it hard for investors to buy in if they are fundamentally against one technology (e.g. user data mining) but want to support another (e.g. self driving cars). It ultimately results in the entire company being less valuable than the sum of its parts (think Yahoo where it's Alibaba holdings alone were worth more than its market cap). In other words, by having so many diverse bets, investors in Alphabet have to buy into all of those bets. So the number of investors that believe in all of those bets is smaller than the sum of all investors that would invest in each one individually.
- waqf 10y ago
  I guess nobody ever invests in index funds, then.
  - goldfeld 10y ago
    The members of an index fund are supposed to have little correlation; not the same goes for Alphabet's divisions.
    - twblalock 10y ago
      Quite a few index funds comprise members that have very high correlation with each other, e.g. funds that track sector-specific indexes in health care, natural resources, etc.
  - hueving 10y ago
    An index fund won't suddenly invest in unicorns or whatever else on a whim. They follow a particular plan (e.g. track a sector, track the S&P, whatever).
- morgante 10y ago
  It all depends on whether investors or Google executives are better allocators of capital. Google executives certainly think they're better and for the time being it seems investors agree.
  - hueving 10y ago
    >it seems investors agree. It seems some* investors agree. There is no way to know how much more they could be worth if they were separate entities.

hueving 10y ago

"should" from a market efficiency standpoint. By being an all or nothing proposition, it makes it hard for investors to buy in if they are fundamentally against one technology (e.g. user data mining) but want to support another (e.g. self driving cars). It ultimately results in the entire company being less valuable than the sum of its parts (think Yahoo where it's Alibaba holdings alone were worth more than its market cap). In other words, by having so many diverse bets, investors in Alphabet have to buy into all of those bets. So the number of investors that believe in all of those bets is smaller than the sum of all investors that would invest in each one individually.

waqf 10y ago
I guess nobody ever invests in index funds, then.
- goldfeld 10y ago
  The members of an index fund are supposed to have little correlation; not the same goes for Alphabet's divisions.
  - twblalock 10y ago
    Quite a few index funds comprise members that have very high correlation with each other, e.g. funds that track sector-specific indexes in health care, natural resources, etc.
- hueving 10y ago
  An index fund won't suddenly invest in unicorns or whatever else on a whim. They follow a particular plan (e.g. track a sector, track the S&P, whatever).
morgante 10y ago
It all depends on whether investors or Google executives are better allocators of capital. Google executives certainly think they're better and for the time being it seems investors agree.
- hueving 10y ago
  >it seems investors agree. It seems some* investors agree. There is no way to know how much more they could be worth if they were separate entities.