Leaving Google in No Man's Land

by: Trader Mark April 04, 2008 | about stocks: AAPL / GOOG    
Trader Mark

Trader Mark

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Google (GOOG) is sort of in no man's land, both in its chart and in my portfolio. It is not rallying with nearly the same vigor as some of the other tech names, and I have had it as a minor position for a while down at 0.4%. With a slow down in the economy, and potential slowdown in advertising, I don't have enough confidence to really build a meaningful position here. This does not mean it cannot go up, but if I clear out some clutter in the portfolio to keep the number of names from growing too high, this is one name to go.

The valuation is pretty compelling, but I'd rather add to an Apple (AAPL) rather than Google as a "tech exposure". So out Google will go. I have never had this as a large position and exit with a small loss of about $2.2K. Considering the carnage since the New Year that amount is more than ok. Thankfully I took profits along the way and did not have large exposure to the massive downturn. Google is building a nice base, from which at some point it should make a very large move off of - but it should be acting better than it is with the return to speculative stock buying. So that time for a "sustained" (not dead cat) rally could be down the road a bit.

I am closing my position in Google here in the $450s, and have held this name since Aug 6. If we can see a meaningful move up through $500, I would get more excited for the potential for a sustained move. Google is just flopping around like a fish out of water at this time... maybe telegraphing more negative news to come.

Disclosure: Long Apple in fund; no personal position

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This article has 10 comments:

  •  
    Apr 04 08:40 AM
    I rather be in Apple I agree.....Apple has a shot to go to $300 as written here....thecreathingwealthblog.... Google does seem to be lagging the market for now....but the fundamentals are strong....stock may earn $25 a share next so at these prices it is a value....but If I had to choose apple or google...I would go with Apple.
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  •  
    Apr 04 09:50 AM
    I have some GOOG at 500-ish. I expect it'll be back to 700 by year's end, but I'm not accumulating more. I think AAPL has more upside, and lower risk.
    Reply | Link to Comment
  •  
    Apr 04 10:06 AM
    What was the point of this rambling "article"? It has no thesis, and doesn't attempt to provide a valuation for Google. This moron would like Google more at $500 than he does at $450? Does this website screen its contributers or what?
    Reply | Link to Comment
  •  
    Apr 04 10:38 AM
    I agree, APPL is a better position, and is I think set for a tipping point where the iPhone becomes enormously popular internationally. Even if it's unlocked, I think they are making good margins. Also, I believe a $100 edge based iphone for 2 year subscription contract after iPhone II would virtually eliminate sales of other phones in areas where AT&T has good coverage. As it is now, you can get iPhone at AT&T, with contract, just not at Apple store (where they have been swamped with sales to grey market buyers).

    Also, I think a new iPod touch or an expansion of those models could be a game changer as well.

    Then there is the Mac, best computer for almost anyone, and that is not likely to change, it's growing more popular all the time, and even runs Windows better than any windows computer (if you would want to do that).
    Reply | Link to Comment
  •  
    Apr 04 01:50 PM
    great timing; you sell and the stock goes up $20; only $25 short of your buy it back price
    Reply | Link to Comment
  •  
    Apr 04 03:08 PM
    You should check out my top 10 holdings and compare them to Google's 3% return today

    for the other comment - buying above $500 is a technical breakout - thats why... it doesnt make sense for those who dont use TA.
    Reply | Link to Comment
  •  
    Apr 04 05:32 PM
    I agree with adamcz. Is this some sort of joke?
    Reply | Link to Comment
  •  
    Apr 06 02:24 PM
    I think the average investor perceives far more moving parts at Google than at Apple or Research in Motion. When technology stocks like these go down many investors can't maintain or get the conviction back to buy and hold the name. The simpler the story, the easier it is to get it back and become convinced. To me Apple is the clearest even though people are confused about the iPod transition that may happen this year.

    Even though the bulk of Google revenue comes from advertising the number of products, initiates and markets they are in is hard for investors to fully grasp. Even harder for them is knowing if companies like Microsoft, Amazon or eBay are doing something that might hurt prospects for Google.

    On top of it analysts cut near-term estimates and price targets based on the latest news blip. This causes investors to wonder about the long-term story even though it is not changed. For the record we established a fundamental valuation on Google a few months ago of $800 per share. Since nothing has changed the fair value estimate remains the same.

    Market sentiment and near-term news and noise will push the stock around but unless one doubts the fundamentals of the Internet one would want to own the stock at these levels.
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  •  
    Apr 10 04:13 PM
    "You should check out my top 10 holdings and compare them to Google's 3% return today"

    That is quite simply one of the dumbest comebacks I could have imagined. No investor measures their results by the month, let alone the day. I'd be interested in seeing your average compounded return over a 10 year+ period though.
    Reply | Link to Comment
  •  
    Apr 17 05:04 PM
    As I said, this better have been an April fool's joke.
    Reply | Link to Comment
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