5 ms·

is it still a good idea to buy google stock?

by dmead 13y ago

psbp 13y ago
I might be wrong, but it certainly seems overvalued.
encoderer 13y ago
Do you believe Google will be a more valuable business in the future than they are today? I sure do. And i don't have any reason to believe the market has "priced in" the value of Google's future growth. Dollar cost average into it, and be a buy-and-hold investor, and it's hard to go wrong.
- cbr 13y ago
  I don't have any reason to believe the market has "priced in" the value of Google's future growth Why don't you think people deciding how much to pay for Google stock are considering Google's expected growth? Google's market cap is similar to Exxon's with far lower revenue and much lower profit. Dollar cost average into it, and be a buy-and-hold investor, and it's hard to go wrong. It's not hard at all to go wrong that way: investing in only one stock is unnecessarily risky. If you're picking individual stocks you should be asking "what's my edge?" or "what do I know that other smart informed people don't?" Sure, you see lots of potential for growth at Google; so does everyone else, that's not going to make you any money. Unless you're better informed in a useful way it's much better to just buy a slice of the market with index funds.
  - encoderer 13y ago
    Of course the people buying Google stock are considering expected growth. (Though I wouldn't call market dynamics "deciding." You humanized that in an interesting way.). But I don't think all future growth is priced-in to the stock. Nor should it be. The question is, do you think there is upside, can your investment grow as the company grows. I've always been fascinated by the people who prescribe index funds to everybody as the only right play. Of course I own index funds. Over half my total portfolio is in tax favored retirement accounts and all of that is in low-cost index funds. But if you have more tolerance for risk and a desire to personally manage your money, investing smartly and holding for the long term is a perfectly reasonable and often profitable strategy. I stand by what I've said. There is no reason for me to believe that long-term value in Google will not be returned to share holders. There is certainly an amount of risk here. But buy-and-hold is a solid strategy IMHO.
lutusp 13y ago
To answer your general question: http://arachnoid.com/equities_myths http://arachnoid.com/equities_myths But specifically, by the time a company is widely regarded as successful, noteworthy, at the top of its game, the train has left the station. By contrast, Warren Buffett would invest in a "company" consisting of a couple of guys in a garage with a vision for the future.
- chollida1 13y ago
  > By contrast, Warren Buffett would invest in a "company" consisting of a couple of guys in a garage with a vision for the future. I think you meant would NOT invest in that scenario. Warren invests in - companies with strong reoccurring revenues - strong moats around them to protect them from competitors - companies that are the number one or two in their chosen fields two guys in a garage with a vision of the future is sadly missing all of these things. That's a very unlikely scenario for Warren Buffet to invest in.
  - lutusp 13y ago
    Buffett is best known for investing in companies that are undervalued. If he simply invested as you describe, he would be lost in a crowd of investors who use the same criteria. Also it's important to say that some investors are going to succeed by chance, not design, and there cannot be a consistent winning equities investment formula or method. More here: http://arachnoid.com/equities_myths http://arachnoid.com/equities_myths
- corresation 13y ago
  By that analysis, Google "left the station" in what, 2005? Microsoft left the station in the late 80s. Apple left the station in 2005? And to the contrast, Warren Buffer invests in things like Conoco, WellsFargo, and, humorously, Exxon. Small doesn't mean growing. Large doesn't mean shrinking. Any analysis that assumes either is simply flawed. Buffet looks for companies with good fundamentals and returns, whether they're two guys (though I've never, ever heard of him doing such a speculative investment. That seems entirely contrary to his philosophy) or 200,000 people. Google currently makes most of their money in advertising. Anyone paying attention knows that they're working really hard at expanding out from that, and in a few short quarters their non-advertising revenue exploded to 10% of their total (it sounds small, but 10% of a huge number is a huge number), with an incredible growth rate. If they start successfully leveraging their smarts and technology, they truly can be a trillion dollar company. The same is true of Apple. They've coasted on the iPad/iPhone train for a while -- a very enriching coast -- but if they apply their designs and intellect to other industries, the impact can be absolutely enormous.

is it still a good idea to buy google stock?

by dmead 13y ago

is it still a good idea to buy google stock?

psbp 13y ago

I might be wrong, but it certainly seems overvalued.

encoderer 13y ago

Do you believe Google will be a more valuable business in the future than they are today? I sure do. And i don't have any reason to believe the market has "priced in" the value of Google's future growth. Dollar cost average into it, and be a buy-and-hold investor, and it's hard to go wrong.

cbr 13y ago
I don't have any reason to believe the market has "priced in" the value of Google's future growth Why don't you think people deciding how much to pay for Google stock are considering Google's expected growth? Google's market cap is similar to Exxon's with far lower revenue and much lower profit. Dollar cost average into it, and be a buy-and-hold investor, and it's hard to go wrong. It's not hard at all to go wrong that way: investing in only one stock is unnecessarily risky. If you're picking individual stocks you should be asking "what's my edge?" or "what do I know that other smart informed people don't?" Sure, you see lots of potential for growth at Google; so does everyone else, that's not going to make you any money. Unless you're better informed in a useful way it's much better to just buy a slice of the market with index funds.
- encoderer 13y ago
  Of course the people buying Google stock are considering expected growth. (Though I wouldn't call market dynamics "deciding." You humanized that in an interesting way.). But I don't think all future growth is priced-in to the stock. Nor should it be. The question is, do you think there is upside, can your investment grow as the company grows. I've always been fascinated by the people who prescribe index funds to everybody as the only right play. Of course I own index funds. Over half my total portfolio is in tax favored retirement accounts and all of that is in low-cost index funds. But if you have more tolerance for risk and a desire to personally manage your money, investing smartly and holding for the long term is a perfectly reasonable and often profitable strategy. I stand by what I've said. There is no reason for me to believe that long-term value in Google will not be returned to share holders. There is certainly an amount of risk here. But buy-and-hold is a solid strategy IMHO.

lutusp 13y ago

To answer your general question: http://arachnoid.com/equities_myths http://arachnoid.com/equities_myths But specifically, by the time a company is widely regarded as successful, noteworthy, at the top of its game, the train has left the station. By contrast, Warren Buffett would invest in a "company" consisting of a couple of guys in a garage with a vision for the future.

chollida1 13y ago
> By contrast, Warren Buffett would invest in a "company" consisting of a couple of guys in a garage with a vision for the future. I think you meant would NOT invest in that scenario. Warren invests in - companies with strong reoccurring revenues - strong moats around them to protect them from competitors - companies that are the number one or two in their chosen fields two guys in a garage with a vision of the future is sadly missing all of these things. That's a very unlikely scenario for Warren Buffet to invest in.
- lutusp 13y ago
  Buffett is best known for investing in companies that are undervalued. If he simply invested as you describe, he would be lost in a crowd of investors who use the same criteria. Also it's important to say that some investors are going to succeed by chance, not design, and there cannot be a consistent winning equities investment formula or method. More here: http://arachnoid.com/equities_myths http://arachnoid.com/equities_myths
corresation 13y ago
By that analysis, Google "left the station" in what, 2005? Microsoft left the station in the late 80s. Apple left the station in 2005? And to the contrast, Warren Buffer invests in things like Conoco, WellsFargo, and, humorously, Exxon. Small doesn't mean growing. Large doesn't mean shrinking. Any analysis that assumes either is simply flawed. Buffet looks for companies with good fundamentals and returns, whether they're two guys (though I've never, ever heard of him doing such a speculative investment. That seems entirely contrary to his philosophy) or 200,000 people. Google currently makes most of their money in advertising. Anyone paying attention knows that they're working really hard at expanding out from that, and in a few short quarters their non-advertising revenue exploded to 10% of their total (it sounds small, but 10% of a huge number is a huge number), with an incredible growth rate. If they start successfully leveraging their smarts and technology, they truly can be a trillion dollar company. The same is true of Apple. They've coasted on the iPad/iPhone train for a while -- a very enriching coast -- but if they apply their designs and intellect to other industries, the impact can be absolutely enormous.