I just read an article at Vestopedia about why the author sold his Google stock at $741. His reasoning was based on an article by Stephen Dubner (of the ever-popular Freakonomics) about regression to the mean by athletes.
Thing is, I don’t agree with the reasoning that Google should go lower because their freakishly high growth rates can’t continue and they will regress towards more “average” growth rates. Companies aren’t coin flips, they don’t follow statistical rules. Google has seen exceptional growth because they continue to innovate and add real-estate that allows them to grow at an incredible rate.
So why did I go short at $700? Obviously Google had already slid $40 points, but they could have stopped there right.. I shorted GOOG at $700 because the market is fearful and uneasy. I don’t have any doubt that Google will continue to grow at an incredible rate. Online ad spend isn’t going to decrease, and Google is constantly finding new ways to deliver ads. Android doesn’t excite me yet either, and a lot of their stock price was based on the GPhone. Bottom line is that while Google will continue to grow, I don’t think it merits the current multiple EVEN at extreme growth rates. It needs to come back in line. So far I’ve been reasonably correct as the stock has found support at $630. I’d probably cover at $600. We’ll see what happens next week. Right now the market is still scared, and I’m not ready.
That is nice, I am on the other end waiting for it to hit 600 to buy your shares. It is a freak stock. I will probably get in at 600 then try to sale at either 650 or 700 depending on how slow it goes up. If there is much mainstream media talk of the cell phone or the frequency they want to buy, it could move up quickly.
Just curious as to if you were able to cover while it was low, or if you were waiting. Did you have a time limit for the cover?
I covered at about $640.