Practice Management

I have to admit that I have always been more interested in the average Doug Jones than the Dow Jones average, but then I am just a common guy.

But, the big drop in Google stock price is just proof positive that the stock market is gambling with all of the precision of betting on a horse race.  This does not represent a rational market.  It represents an irrational market.

The news is this.  Google's stock price plummets 9.8% in one day, losing $52.12 a share, to finish at $481.32 per share.

Why?

Google did not meet "analysts'  expectation".  And, there in is the problem.  We are betting on the expectations of people and not on the feat that was actually performed by a company.  Kind of like a Realtor that substantially overprices a property only to sell it 10% above any other house in the neighborhood being called a failure.  Google did not lose money.  It earned beaucoups of greenbacks.  Not only is this fact not called a success, but the press starts talking about jitters, red flags, and being unnerved.

Really?  Unnerved?  The sky is falling!  The sky is falling!  Sometimes you have to wonder if business journalist ever actually think about what they write.

Here is what the "analysts" and the "press" are so upset about.  Google earned $1.25 billion (that is with a 'B'), or $3.92 a share for the three month period ending in June.  And, that ONLY represented a 35% INCREASE IN NET INCOME over the same time last year.  Google, in short, only made a profit of $925 million, or $2.93 per share, for a THREE MONTH PERIOD OF TIME.  OMG!  Somebody call a bankruptcy attorney!

The culprit?

If not for Google compensating its employees with stock it would have earned even more money or $4.63 a share.  Wall Street and the market does not like to see line employees make money.  In fact, it is not uncommon to see stock prices zoom when unemployment rises and or massive layoffs are announced.

Google has also suffered some due to the slow in click throughs, as this is how it makes its money.  Apparently, fewer people than expected clicked through to Google's advertisers  because of the present piss-poor economy in which we all suffer.  But let me tell you this.  If I have to do badly because of the economy, a 35% increase in profit is the way to do it.

There was a study a few years back that I remember reading about where a group of B-school students threw darts at a list of stocks and then tract those stocks as against the analysts.  The group of stocks picked by the random throw of the dots beat the analysts.

Sometimes I think I would rather just invest my money in Vegas.  You say that gambling in Vegas is not investing.  Well, that is my point about Wall Street.  Oil prices, the fall of Bear Sterns, the fall of Countrywide, the falling dollar, the bailout of Freddie Mac and Fannie Mae, the strange drop in Google stock, and on and on.  The swashbucklers of Wall Street are into victimizing people and companies to make money as opposed to promoting anything.