I can not understand the Market.
Yesterday Google reported an 80% increase in Net Income from $ 204.1 million to $ 372.2 million. This represented an increase in per share earnings from 71 cents per share to $ 1.22 per share. This was for the 4th quarter of 2005.
What does the market do ??
Google' stock dropped 12% loosing $ 16 billion in shareholder wealth.
All because Google missed some " guestimate " by analysts as to what the results should have been.
I am from the old school and Google's results look pretty good to me.
The "service base" dot com stocks are over valued to begin with and are based on speculation. None of them are based on true "asset" worth and are ONLY based on forecasts. I personally feel there needs to be controls put on these types of Internet "service based" stocks. This is what destroyed the market in the early part of the century and had a domino effect on companies that had true assets such as telecoms and other, hard product,technology stocks.
Or there needs to be more intelligence in investing. Then again the Gordon Gecko mentality usually takes over. "Greed is good".
Then it destroys everything.
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I agree with your comments to a point. I was not commenting on whether Google was overvalued to begin with, BUT on how their stock price nose dived on the fact that they failed to me their analysts projections.
They posted awesome numbers and their reward was a huge crash in their stock for failure to meet their numbers.
Invest wisely. I got in on the "dot com" bit and lost my shirt bigtime in the crash . Have since then been more watchful of events. I also have gold investments, rare coins, including a "shipwreck" one and other market investments. Good luck
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I've won, lost, won, lost, and won again in the market. That's the way it goes but I agree with the insanity of some of the investors when a particular company doesn't perform up to Wall St. predictions.
One thing that needs to happen though is for the SEC to put controls on companies trading their own stock. Corporate officers have to divulge their positions in the companies they represent and I think the company ought to as well.
I know the company I used to work for was manipulating the price of the stock by buying it after hours when the price was down, thereby driving the price up, and then selling it when the price was high sending the price down. They'd collect a nice profit and keep the stock at the level they wished. It has traded in the $40 - $45 range when Wall Street Journal claimed, based on it's assets, ATOI and revenues, that it should be trading in the $17 - $19 range.
Book me on your next cruise and enjoy your personal punching bag.
The egos of the analysts were injured when they failed to factor in a proper tax rate for Google. Pretax earnings were pretty much as predicted, after tax about 20cents lower. The market is not driven by assets, earnings , return on investment or cash flow, it is driven on prediction, speculation, news , innuendo and emotion. What happened was a run up in price og Google prior to the announcement based on all the prognostications of the Wall Street Gurus. When the real numbers come out the market momentarily compensates for the differences and somewhere in between is where the price will settle when the smoke clears. The nice part about having no money is that you don't have to worry about these things.