You see the ads all the time (there's probably one on the right side of this page thanks to the magic of Google ads). 600% penny stock gains! Triple your money in one day! Before you go ahead and waste your hard earned dollars on such nonsense, check out the top five reasons why you shouldn't gamble your hard earned dollars away.
5: It's Like Riding a Roller Coaster.
Penny stocks can go up really fast; that's what makes them so attractive to people trying to make a quick buck. But they can also go down really fast, and all your hard earned gains can evaporate in minutes.
4. A Lot of Times They're Illiquid
Liquidity refers to how easily you can sell an asset. Because penny stocks don't trade on regular stock exchanges, they're not as easy to buy or sell as regular investments. This means that at best it's going to be difficult for you to get a good price on them, and at worst you won't be able to sell when the price goes down quickly. Entire hedge funds have collapsed because they got into investments that they couldn't sell and their assets quickly became worthless. Take a lesson from them and leave penny stocks alone.
3. You Get What You Pay For
If somebody told you that you could buy a painting for $1000 today and it would be worth $3000 tomorrow, would you buy it? No, then why would you do the same thing when investing in a business? A stock like Google trades for $600 a share because it's the dominant player in its field and everybody knows how it makes its money. A stock with random initials like ZXYH trades for five cents a share because somebody heard from a friend of a friend that it's going to someday maybe build jet packs that let people fly to the moon.
2. The People Who Are Hyping Them To You are Paid to Do So
That guy who's promising you a 600% return on your investment is most likely being paid by the penny stock owners to hype their company. Always read the fine print on any web site, and sometimes you'll catch them saying how they were paid. Even 50 Cent was recently caught hyping his own stock on twitter. Sometimes though, they won't even mention it. Just remember, the people running ads are there to make money for themselves, not for you.
1. It's a Fraudster's Paradise
There's a lot of fraud on regular old Wall Street where the SEC can see everything that's going on. Penny stocks are basically sold in the back alley of finance, a place where the cops rarely go. The classic pump and dump scam works like this: penny stock owners hype their stock through press releases and over the internet; sometimes they even get celebrities like 50 Cent and Shaq to endorse their product. Then, when a bunch of marks start buying and the stock reaches a high enough price they sell all their shares, make a profit, and laugh all the way to the bank while the people who fell for the scam watch as the value of their shares dwindles back to zero. Don't be one of those people.
Monday, January 31, 2011
Thursday, January 27, 2011
So You Want to Be an Investment Banker
"How do I become an investment banker?" is a question we find ourselves answering all the time. First, watch this video just so you can understand exactly what effect Wall Street will have on your life. If you're still determined to enter this industry, then read on.
First make sure you study finance and math in undergrad, and get your Masters in Business Administration. That's mainly so you can understand exactly what it is your doing.
Next, it's important that you demonstrate excellence in multiple fields. Places like Goldman Sachs have so much money that they could literally hire every college graduate with perfect grades if they wanted to. So set yourself apart by demonstrating that you have depth. Do you speak French? Were you captain of the rowing team? Having multiple interests demonstrates that you can attack problems from multiple angles and that you'll bring more than a narrow-minded focus to the team.
It's also vitally important that you demonstrate intellectual curiosity during your interview. Betrand Russell once said, "Most people would rather die than think: many do." You want to show your potential employers that you can think for yourself, that you can help them innovate new products, and that you can actually grasp the risks and benefits that each investment poses to the bank.
The most important thing, though, is to network. Successful businesses are by and large driving by personal relationships. Steve Eisman, who made a fortune during the financial crisis, started out in life as a lawyer and eventually got a job as an analyst because his parents worked at the firm that hired him. The same firm also hired his nanny, again because of his parents. Dr. Michael Burry, a neurologist who went on to become a successful hedge fund manager, got his start by posting his trades online, and was discovered by famous investor Joel Greenblatt.
So get an internship on Wall Street and meet and befriend as many people as possible. Understand too that Wall Street is a hyper competitive environment where coworkers are more than willing to commit fraud and stab each other in the back because of the vast sums of money involved. The key to success there is having lots of allies who can recommend you for positions and protect your back.
First make sure you study finance and math in undergrad, and get your Masters in Business Administration. That's mainly so you can understand exactly what it is your doing.
Next, it's important that you demonstrate excellence in multiple fields. Places like Goldman Sachs have so much money that they could literally hire every college graduate with perfect grades if they wanted to. So set yourself apart by demonstrating that you have depth. Do you speak French? Were you captain of the rowing team? Having multiple interests demonstrates that you can attack problems from multiple angles and that you'll bring more than a narrow-minded focus to the team.
It's also vitally important that you demonstrate intellectual curiosity during your interview. Betrand Russell once said, "Most people would rather die than think: many do." You want to show your potential employers that you can think for yourself, that you can help them innovate new products, and that you can actually grasp the risks and benefits that each investment poses to the bank.
The most important thing, though, is to network. Successful businesses are by and large driving by personal relationships. Steve Eisman, who made a fortune during the financial crisis, started out in life as a lawyer and eventually got a job as an analyst because his parents worked at the firm that hired him. The same firm also hired his nanny, again because of his parents. Dr. Michael Burry, a neurologist who went on to become a successful hedge fund manager, got his start by posting his trades online, and was discovered by famous investor Joel Greenblatt.
So get an internship on Wall Street and meet and befriend as many people as possible. Understand too that Wall Street is a hyper competitive environment where coworkers are more than willing to commit fraud and stab each other in the back because of the vast sums of money involved. The key to success there is having lots of allies who can recommend you for positions and protect your back.
Wednesday, January 26, 2011
Four Reasons Not to Waste Your Money with Mutual Funds
Number 4: Market timing. Most mutual funds are required to stay fully invested in the market, even if it's crashing just as it did in 2008. Standing buy your fund in a bear market is a great way to lose your money.
Number 3: Transparency. Often it's difficult to understand exactly what your fund is invested in, or why it feels as though those stocks will bring you the best results. Even more importantly, if the star fund manager who got you those great returns over the past three years leaves, you may very well not know about it. And then you'll be sitting there, wondering why your money has suddenly started to disappear.
Number 2: Fees. Mutual funds don't make their money by making you rich. They make their money by charging you for the "privilege" of giving your money to them. And they'll keep charging you even if they're losing your money in a bear market or their star manager has moved on to better things.
Number 1: They just don't work. Period. Only one in three funds will beat their benchmark in any year, and more than 95% will fail to beat the market over ten years.
So unless you happen to like being charged to make a small amount of money, stay away from mutual funds. What should you do then? If you have only a small amount of money invest in an index fund that directly tracks the market. The fees are lower, and there's far less risk.
Number 3: Transparency. Often it's difficult to understand exactly what your fund is invested in, or why it feels as though those stocks will bring you the best results. Even more importantly, if the star fund manager who got you those great returns over the past three years leaves, you may very well not know about it. And then you'll be sitting there, wondering why your money has suddenly started to disappear.
Number 2: Fees. Mutual funds don't make their money by making you rich. They make their money by charging you for the "privilege" of giving your money to them. And they'll keep charging you even if they're losing your money in a bear market or their star manager has moved on to better things.
Number 1: They just don't work. Period. Only one in three funds will beat their benchmark in any year, and more than 95% will fail to beat the market over ten years.
So unless you happen to like being charged to make a small amount of money, stay away from mutual funds. What should you do then? If you have only a small amount of money invest in an index fund that directly tracks the market. The fees are lower, and there's far less risk.
Not Enemies, But Frenemies
I like this video more than some others because it points out a crucial fact that most people miss in all the hysteria about US debt and China's rise; China needs us just as much as we need them. There's a saying that when you owe the bank a thousand dollars the bank owns you. But when you owe the bank a million dollars, you own the bank. Both China and the US are too big to fail, and neither country can dictate policy to the other because they are so interdependent.
Saturday, January 22, 2011
5 Things to Do With $5000
One of the most frequent questions we answer is "I've got [insert small amount of money here] what do I do with it?" So let's say you've got $5000 and it's burning a hole in your pocket. Here's how you should consider spending it.
Number 5: Pay off your credit card debts. If you're walking around with a 20% interest rate on your credit cards, that's an instant 20% return. It's hard to beat that.
Number 4: See the world. Studies have shown that experiences make people happier than things. For about $5000 (plus airfare and other sundry expenses) you can actually travel to Antarctica. Sure the neighbors may have a nicer car, but chances are you're not going to run into anybody else who has seen penguins outside of a zoo.
Number 3: Put it away for your children's college. The average cost of a four year public college has increased nearly 51% over the past ten years. Many states have 529 Savings Plans that lets savings for higher education grow tax free.
Number 2: Donate it to buy Vitamin A and Zinc for malnourished children. How many chances do you get to help a hungry child grow up to be a healthy adult? Buying micronutrients has been advocated as being one of the most cost-effective ways to help the world.
Number 1: Invest it so that you can do all of those things in the future.
Number 5: Pay off your credit card debts. If you're walking around with a 20% interest rate on your credit cards, that's an instant 20% return. It's hard to beat that.
Number 4: See the world. Studies have shown that experiences make people happier than things. For about $5000 (plus airfare and other sundry expenses) you can actually travel to Antarctica. Sure the neighbors may have a nicer car, but chances are you're not going to run into anybody else who has seen penguins outside of a zoo.
Number 3: Put it away for your children's college. The average cost of a four year public college has increased nearly 51% over the past ten years. Many states have 529 Savings Plans that lets savings for higher education grow tax free.
Number 2: Donate it to buy Vitamin A and Zinc for malnourished children. How many chances do you get to help a hungry child grow up to be a healthy adult? Buying micronutrients has been advocated as being one of the most cost-effective ways to help the world.
Number 1: Invest it so that you can do all of those things in the future.
Friday, January 21, 2011
Facebook Raises $1.5 Billion
Facebook has managed to raise $1.5 billion from Goldman Sachs and Digital Sky Technologies as it comes ever close to that probable 2012 IPO. That amount gives the site a valuation of $50 billion, $35 billion more than it was valued at just 3 years ago.
Ben Bernanke: States Should Not Expect Loans From the Fed. Who Do You Think You Are, Banks?
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How Many Efficient Market Theorists Does it Take to Change a Light Bulb?
None. If the light bulb needed changing the market would have done it already.
Thursday, January 20, 2011
Crafty Wal-Mart Gets First Lady's Endorsement
So what do you do if you're a giant retailer that wants to expand into liberal enclaves on the west coast and north east but keeps running into opposition from labor unions? Jump on the first lady's healthy food initiative of course. Wal-Mart has announced that it will seek to reduce sodium and sugar content in the foods that its Great Value label sells. Michelle Obama expressed her delight by saying, "I believe this charter is a huge victory for folks all across this country."
We're currently bullish on Wal-Mart due to accelerating earnings, relatively low PE, and it's got momentum behind it. Add to the fact that Wal-Mart accounts for 33% of all grocery dollars spent in the US and potential for world-wide growth and you've got yourself a winner.
We're currently bullish on Wal-Mart due to accelerating earnings, relatively low PE, and it's got momentum behind it. Add to the fact that Wal-Mart accounts for 33% of all grocery dollars spent in the US and potential for world-wide growth and you've got yourself a winner.
Wednesday, January 19, 2011
The Top 5 Reasons Not to Invest in Gold
Number 5: You can now sell your gold . . . at the mall. That's almost as bad as when the banks were giving mortgages for $750,000 homes to migrant workers making $17,000 a year.
Number 4: George Soros called gold, "The ultimate asset bubble" and began reducing his position in it last year.
Number 3: Gold's historical return is actually close to 0, believe it or not. It's price always goes up during economic crises, and then deflates. As the economic outlook continues to improve, look for the price of gold to start declining.
Number 2: Dubai now has gold-dispensing ATMs. They also have an indoor ski slope . . . in the desert. If anybody symbolizes profligacy, it's Dubai.
Number 1: Just ask Warren Buffett: "You could take all the gold that's ever been mined, and it would fill a cube 67 feet in each direction. For what that's worth at current gold prices, you could buy all -- not some -- all of the farmland in the United States. Plus, you could buy 10 ExxonMobils, plus have $1 trillion of walking-around money. Or you could have a big cube of metal. Which would you take?"
Note: We will occasionally swing trade gold. But we would never consider it as a long term investment.
Number 4: George Soros called gold, "The ultimate asset bubble" and began reducing his position in it last year.
Number 3: Gold's historical return is actually close to 0, believe it or not. It's price always goes up during economic crises, and then deflates. As the economic outlook continues to improve, look for the price of gold to start declining.
Number 2: Dubai now has gold-dispensing ATMs. They also have an indoor ski slope . . . in the desert. If anybody symbolizes profligacy, it's Dubai.
Number 1: Just ask Warren Buffett: "You could take all the gold that's ever been mined, and it would fill a cube 67 feet in each direction. For what that's worth at current gold prices, you could buy all -- not some -- all of the farmland in the United States. Plus, you could buy 10 ExxonMobils, plus have $1 trillion of walking-around money. Or you could have a big cube of metal. Which would you take?"
Note: We will occasionally swing trade gold. But we would never consider it as a long term investment.
Goldman Sachs Profit Drops 53%; Pays Out Bonuses of $15.3 Billion
Goldman Sachs's fourth quarter profit dropped 53% due to falling bond trading revenue. Shares of GS were down over 2% in Wednesday morning trading. Not to worry though; Goldman's bonus pile fell only 5%.
Naturally, we are still bullish on Goldman. After all, they do basically run the world, making them as close to the Illuminati as you can get. Plus they've got a good PE ratio.
Naturally, we are still bullish on Goldman. After all, they do basically run the world, making them as close to the Illuminati as you can get. Plus they've got a good PE ratio.
Tuesday, January 18, 2011
Stock of the Day: GE
We're currently bullish on GE. Coming on the heels of its deal with Comcast regarding NBC, this stock has modestly increased quarterly earnings estimates and a pretty good price to sales ratio.
Starbucks Introduces New Big Gulp of Coffee
For all those caffeine addicts out there Starbucks has now introduced its new Trenta, 31 oz coffee. The Trenta is actually technically larger than the human stomach's holding capacity.
FCC Approves Comcast Takeover of NBC
And so media consolidation continues. Subject to multiple conditions, Comcast has been approved to take over NBC. What exactly this means for the future of online television content remains to be seen.
Steve Jobs Takes Medical Leave of Absence; Apple Shares Down 2.25%
On Monday Apple announced that its CEO Steve Jobs is taking an indefinite leave of absence. Apple shares promptly fell 2.25%, although they recovered about half that in after hours trading. The question of course is whether or not Apple can continue to hold on to its place as the second largest company behind Exxon Mobil without its visionary founder.
In a word, no. Just as Microsoft has stumbled after Bill Gates's absence, so too Apple is basically built around Steve Jobs's direction. Jobs happens to be that rare combination of techno-geek and artist; Apple's success hasn't been due nearly as much to technical innovation as it has been to its founder's unique ability to make technological innovation accessible to the masses. Apple didn't invent the GUI, the mouse, the MP3 player, the smart phone, or the tablet computer. What it did was perfect all of those things. When we first heard about the iPad, we thought dismissively, "Why would anybody want this? It's the Jitterbug of laptops." And that's when we truly understand Steve Jobs's genius; he had created a computer that the least technologically savvy people could use with ease.
Apple does have a commanding lead in the smartphone and table computer markets, but as we've posted before, it faces stiff competition from Google and other players. The company won't suddenly go bankrupt if Jobs does permanently step down from the CEO position, but we are looking at a situation where Apple becomes what Microsoft currently is. After all, look at what happened when Jobs was first fired from the position.
Still, in the short term we're bullish on Apple stock. It has a relatively low PE, and its Price to Sales Ratio looks very good as well.
In a word, no. Just as Microsoft has stumbled after Bill Gates's absence, so too Apple is basically built around Steve Jobs's direction. Jobs happens to be that rare combination of techno-geek and artist; Apple's success hasn't been due nearly as much to technical innovation as it has been to its founder's unique ability to make technological innovation accessible to the masses. Apple didn't invent the GUI, the mouse, the MP3 player, the smart phone, or the tablet computer. What it did was perfect all of those things. When we first heard about the iPad, we thought dismissively, "Why would anybody want this? It's the Jitterbug of laptops." And that's when we truly understand Steve Jobs's genius; he had created a computer that the least technologically savvy people could use with ease.
Apple does have a commanding lead in the smartphone and table computer markets, but as we've posted before, it faces stiff competition from Google and other players. The company won't suddenly go bankrupt if Jobs does permanently step down from the CEO position, but we are looking at a situation where Apple becomes what Microsoft currently is. After all, look at what happened when Jobs was first fired from the position.
Still, in the short term we're bullish on Apple stock. It has a relatively low PE, and its Price to Sales Ratio looks very good as well.
Friday, January 14, 2011
Latest Sign of the Techapocalypse: Groupon IPO
It appears that banks are currently competing to underwrite Groupon's IPO.
As we've said before, we think Groupon's more of a fad that's going the way of Gowalla. Shades of 1998 anyone?
As we've said before, we think Groupon's more of a fad that's going the way of Gowalla. Shades of 1998 anyone?
BP Agrees to $8 Billion Stock Swap with Russian Company
BP has further strengthened its ties to Russia through an $8 billion stock swap with Rosneft. Russia already accounts for a quarter of BPs output, and the deal will allow the two firms to to drill together in the Artic Ocean.
As we've stated before, we're still neutral on BP stock. The stock is still down roughly 20% since the oil spill, and it's got decelerating earnings growth.
As we've stated before, we're still neutral on BP stock. The stock is still down roughly 20% since the oil spill, and it's got decelerating earnings growth.
JP Morgan Profit Jumps 47%
JP Morgan declared a 47% jump in fourth-quarter profits, largely thanks to increased credit demand.
We're pretty bullish on this stock, thanks to both the recovering economy and the fact that it's got a relatively low PE.
We're pretty bullish on this stock, thanks to both the recovering economy and the fact that it's got a relatively low PE.
Beatles Sell More than Five Million Songs in Two Months
A lot of people felt the Beatles/iTunes deal was overhyped, wondering just how many fans hadn't already downloaded their favorite songs. Well once again Steve Jobs has proven his critics wrong, as the Fab Four have sold more than five million of their songs online in the past two months.
Just in Case You Were Worried About Wall Street Traders' Finances
Declining bonuses may have saddened some Wall Street traders this month, but they can still take heart: their pay still tops that of neurosurgeons and generals. Although to be fair, those traders are still ineligible for the extra $225 a month a soldier gets for serving in Afghanistan.
Thursday, January 13, 2011
Government Report: Citigroup Still too Big to Fail
The Inspector General of the Troubled Asset Relief Program (TARP) recently released a report stating, "When the Government assured the world in 2008 that it would not let Citigroup fail, it did more than reassure troubled markets -- it encouraged high-risk behavior by insulating risk takes from the consequences of failure." The report also says that Citi is still too big, too interconnected, and too vital to global finance to be allowed to fail.
So now even the government admits that the system is government protection of the rich, and free markets for the rest of us.
So now even the government admits that the system is government protection of the rich, and free markets for the rest of us.
Intel Reports Net Income of $4.3 Billion
The folks at Intel have done it again. They reported a fourth quarter net income of $4.3 billion, beating the Street's estimates by 6 cents a share. That's a 16% gain over 2009.
Stock of the Day: BP
We happen to neutral on BP at the moment. Yes, it's got a decent looking chart and oil's still climbing. But we've also got decelerating earnings growth, and it still has all those oil spill issues to deal with.
Fitty Now Short for Fidelity Investments
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Wednesday, January 12, 2011
Stock of the Day: GOOG
We just wrote about this stock the other day, but it came back up on our radar, so Google gets to be the stock of the day. We're slightly bullish on this stock, what with its having good earnings growth and a decent looking chart. Its PE is a little high, but overall we're bullish on GOOG.
Royalty Trades Awarded CAPS Underdog Charm
The Motley Fool's CAPS site has awarded us the Underdog Charm. Check it out.
Tuesday, January 11, 2011
Stock of the Day: C
Citigroup is fresh from being released from its thralldom to the US government and is releasing earning January 18th. So what's the Royalty Trades position on this stock?
Citi's got good earnings growth and positive insider trading. Plus once it hits above $5 it starts to get acquired by mutual funds, further boosting the stock. So we're in the bullish column on this one.
Citi's got good earnings growth and positive insider trading. Plus once it hits above $5 it starts to get acquired by mutual funds, further boosting the stock. So we're in the bullish column on this one.
A Simplified Explanation of the Credit Crisis
The Crisis of Credit Visualized from Jonathan Jarvis on Vimeo.
This is a pretty simple explanation of what happened. The creator misses a few points though. First of all, don't believe the Wall Street lie that this was somehow the fault of the Fed, Fannie Mae, or the American homeowner. That's basically a banker going 75 in a 35, running over a bunch of people in his porsche, and then blaming the government for setting the speed limit so high. Yes, all of those played their part, but it was Wall Street greed and fraud that manufactured this crisis. As Steve Eisman, who made $1.5 billion shorting these CDOs said, "What-the entire American population woke up one morning and said, 'Yeah, I'm going to lie on my loan application'? Yeah, people lied. They lied because they were told to lie." Eisman and the others like him who made fantastic sums off this crisis weren't betting against people or the government; they were betting against the greed and mendacity of Wall Street.
Anyway, the author leaves out that Wall Street firms were deliberately gaming the ratings agencies. The agencies didn't actually know what was in these bonds; in a lot of cases they just went off the average FICO score on each. So the firms matched people with high FICO scores but short credit histories with people with low FICO scores to increase the average score, and get the agencies to rate this stuff higher. The high ratings then convince lay investors that the bonds are safe, and that's how the fraudsters manage to get away with selling financial instruments that were really just ticking time bombs.
Be Fearful When Others are Greedy
That's sound advice from Mr. Buffett himself. Here's just a few signs that we may be nearing a correction in the next few months.
Facebook's value jumps to $56 billion: It was only $35 billion a few weeks ago. This one may not be that off. After all, if Facebook were a country it would be the third most populated, behind India and then China. What other company can say that? That being said, remember MySpace? How about AOL?
Twitter's value is supposedly $3.7 billion: This one makes less sense. Twitter has plans to generate revenue. Most people also make plans to lose weight after New Year's. We'll see which one is more successful.
Groupon Rejects Google: Half of startup business models are focused on getting bought out by Google. So when the search giant shows up with $6 billion in cash, who in their right mind says no? Actually, it seems that the main issue was that Groupon was afraid Google would get caught up in anti-trust litigation and so demanded a kill fee that Google wasn't willing to pay. Still, $6 billion for a service that spams its users with deals, just happens to be operating during the one time when Americans are most likely to use coupons, and turns off 40% of the merchants who participate in it?
FourSquare Worth $95 million: Another fad service that happens to be operating in an environment in which both Facebook and Google have the potential to quickly dominate it. Remember back to every bubble when people were saying, "This time it's different"? It never is.
Facebook's value jumps to $56 billion: It was only $35 billion a few weeks ago. This one may not be that off. After all, if Facebook were a country it would be the third most populated, behind India and then China. What other company can say that? That being said, remember MySpace? How about AOL?
Twitter's value is supposedly $3.7 billion: This one makes less sense. Twitter has plans to generate revenue. Most people also make plans to lose weight after New Year's. We'll see which one is more successful.
Groupon Rejects Google: Half of startup business models are focused on getting bought out by Google. So when the search giant shows up with $6 billion in cash, who in their right mind says no? Actually, it seems that the main issue was that Groupon was afraid Google would get caught up in anti-trust litigation and so demanded a kill fee that Google wasn't willing to pay. Still, $6 billion for a service that spams its users with deals, just happens to be operating during the one time when Americans are most likely to use coupons, and turns off 40% of the merchants who participate in it?
FourSquare Worth $95 million: Another fad service that happens to be operating in an environment in which both Facebook and Google have the potential to quickly dominate it. Remember back to every bubble when people were saying, "This time it's different"? It never is.
Has Google Gotten Too Big?
Nexus One. Google Wave. Google TV. Google Buzz. What do these four products have in common? They were all listed in Business Insider's 15 Biggest Flops in Tech for 2010. They've declared that "Don't Be Evil" never was a real motto, engineers are fleeing the company for Facebook, and they've even (gasp!) lost search engine market share to Microsoft. What's going on?
Simple. Just like every empire business or otherwise that's ever preceded them, they got big. And slowly that muscle that once defined them turned to fat. Bureaucracy sets in, and the geniuses leave for greener pastures where they don't have to report to a manager every time they want to use a for loop instead of an if statement.
We're still bullish on this stock, though. They are one of the gatekeepers of this not so far-off world in which the Internet is tamed and mostly ruled by corporations. Their earnings growth has accelerated moderately in the past year, and the fact that they're coming up with new products to flop indicates that they still retain the daring to try new things. Still, they're going to have to trim some of that fat if they want to stay ahead of their competitors. Remember when people made movies about AOL? Remember when only people in graphic design bought products from Apple? Cataclysms can come suddenly in the tech world, and Google will have to continue to innovate if it wants to stay alive, not just profit.
Simple. Just like every empire business or otherwise that's ever preceded them, they got big. And slowly that muscle that once defined them turned to fat. Bureaucracy sets in, and the geniuses leave for greener pastures where they don't have to report to a manager every time they want to use a for loop instead of an if statement.
We're still bullish on this stock, though. They are one of the gatekeepers of this not so far-off world in which the Internet is tamed and mostly ruled by corporations. Their earnings growth has accelerated moderately in the past year, and the fact that they're coming up with new products to flop indicates that they still retain the daring to try new things. Still, they're going to have to trim some of that fat if they want to stay ahead of their competitors. Remember when people made movies about AOL? Remember when only people in graphic design bought products from Apple? Cataclysms can come suddenly in the tech world, and Google will have to continue to innovate if it wants to stay alive, not just profit.
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