Slashdot Mirror
Google and Red Hat added to Nasdaq
Rob writes "Google Inc and Red Hat Inc are two of the big technology-related stocks to be added to
the Nasdaq-100 in the latest annual reordering of the 100 largest non-financial stocks on
the Nasdaq stock market. Meanwhile, the addition of Raleigh, North Carolina-based Red Hat
reinforces the credentials of the open source Linux operating system on which the company
has built its business. "
I get more and more flasbacks from the late '90's these days. Let's hope this time people keep their heads together.
-- Cheers!
That's my motto buy high, sell low.
Seriously, one would be stupid to buy only for your two reasons. Adding new services does necessarily mean more revenue. Are you aware of how many companies have suffered when they tried to do too much?
Maybe you were trying to be funny
Well, who knows how high it can go? It would've been nice to get in on the IPO.
;)
Remember, GOOG is a very young stock. Those amazing highs are often countered by amazing lows later on.
-The 1920s, the ROARING '20s, were followed by....worldwide depression.
-The 1990s tech bubble, pop!
Also, Google makes most (all?) their money from advertising, not a product sold, which is a tad shaky in itself. What if enough people use Firefox and AdBlock, and block all of their ads?
As for me, I think I'll wait a while before investing in ANY tech company. Heck, something else big and great may come along and Google may go the way of Altavista, for all we know.
Google has been an innovative and interesting company, and Red Hat probably has the best name recognition for Linux in the business. These steps make sense.
The big question with Google is if these laurels that people keep heaping on them will last when Google inevitably loses stock value, for whatever reason. Hopefully, being added to an index like this indicates that some smart people feel that they are here to stay. However, I think most financial people slept through their classes on "Long Term Investment" in business school (if indeed business schools actually offer classes like that anymore).
Google's success = Innovation and they will need to keep innovating if they want to remain relevant. There is always going to be a Microsoft or other competitor who can figure out a way to clone Google's offerings with "just enough" functionality, the right price point, and some evil marketing ploys to create instant competition.
To remain in this game with a high level of quality means new ideas and the willingness to go to places no one thinks can be reached. That will become harder as some of the money pumped into them starts acting like cholesterol: slowing them down and cutting off blood flow to people's brains. Ph.D's may be good at what they do, but they aren't immune to corrosive influences of cash and the lures of prestige. There is going to come a point where Google starts to face the potential for crippling hubris, and at that point, the company will reach it's first real test as a long-term investment. If it can get over its own reputation and keep going, then you have a company worth owning. If not, then they go the way of the 90's, sooner or later.
Of course, if you believe in the Efficient Markets Hypothesis, then these future expectations of growth are already built into the price of RedHat. In other words, people already expect RedHat to outperform the market over the next six months, and therefore RedHat's price has already risen to account for that. And although the company itself might perform well, the stock has the same expected return over the next six months as the rest of the market.
On the other hand, if you don't believe markets are efficient... you might have an argument here. :)
My userid is prime!
Everyone says that future expectations are built into today's price. Back in July, plenty of people said that the RHAT price of $15 included plenty of expectation for future growth. Even so, I bought at $15 and now it's $24+.
The market is efficient in a broad sense over the long run, but individual inefficiecies exist everywhere you look. If this were not the case, there would be no big winners (or losers) and stocks would be on a par with fixed income investments.
Need an example of market inefficiency? Martha Stewart (MSO). No profits, dismal TV ratings, lousy fundamentals, yet the stock price is stubbornly clinging to $20. Imagine, an entire company whose purpose is to sell the image of a 64-year-old ex-con. They have been flying on vapor since she got out of jail and the TV ratings proved that nobody cares. I expect it will go down the toilet, but it can float in a circular whirlpool pattern longer than you might think.
I am not a financial advisor. This is not investment advice. Your actual mileage may vary.