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Google to be Added to S&P 500 Index
hrbrmstr writes "According to marketwatch.com, Google is being added to the S&P 500, replacing Burlington Resources Inc. While this has provided a short-term boost to the stock price, time will tell what the overall impact will be on this respected index and the institutions (i.e. mutual funds) that follow it."
for Google's corporate image. I wonder when Google makes the Dow Jones? Seems like how Google's stock goes is a big indicator of how the market goes.
Moderation in All Things... Especially Moderation - gurutc
follow it all on http://finance.google.com/
rewriting history since 2109
They are the Standard. And lately their search results have been quite Poor.
I am interested in how they are going to expand with their main sources of income (U.S. and U.K.) pretty much saturated and their other international sources stagnant and losing to entrenched local search engines.
Is through Net Users' adoption of Firefox since the default startup page is Google.
Moderation in All Things... Especially Moderation - gurutc
From Bloomberg
People have been saying this and I will say it again: these are signs of a new internet bubble. People (tend to?) forget. Lessons are learned the hard way.
Although Google's image and bank deposit have become big, be aware their revenues are almost 100% dependent of advertisement revenues. This is a market which can turn upside down in a second.
The P/E and forward P/E of the S&P has been getting higher and higher every decade. This won't help. Sure they have to replace Burlington resources with something, but Google? Well, I guess they offset GM for the short term at least.
For us the Europeans who only care about EEUU only when EEUU means a new Natalie Portman film, coca cola (fuck you pepsi) or the pr0n industry, what is S&P?
> Being added to the S&P doesn't affect me as a practitioner of IT
To be fair, you probably weren't in the article submitters or the editors minds when they decided to run this story here. Some of us buy/sell shares. Being added to an index is generally good for a company because it will automaticallly be added to any index-tracker that uses that index.
> Their stock price is inflated beyond belief and worth only as much as someone
> will pay me.
Every product, service and share price is only worth what others will pay for it.
Right now Google is built on an advertising model. They are just one decline in online advertising away from having everything fall out from under them. If they are going to stay a serious contender, they need to take the corporate search market very, very seriously and make it a key component of their product offerings.
For all that can be said about them, Microsoft at least sells products as the foundation of their business. As long as people need a good (yes, XP is good for many users, this coming from a Mac fan) OS for their cheap PCs or an office suite, Microsoft has a strong position. Google, not so much. They may have the best search product, but they are dependent on online advertising, which can decline even if their engine reachs near sentient comprehension of what you really want to know.
Corporate Search you say?
They're positioning themselves.
Their stock price is inflated beyond belief and worth only as much as someone will pay me.
Kind of like...oh, anything else that you own or produce?
When cryptography is outlawed, bayl bhgynjf jvyy unir cevinpl
Reading what the heads of Google had to say about their stock (careful, careful, careful, our market is so competitive, we could loose to Yahoo or Microsoft any second) I suppose they themselves would not have included it.
Why do I have mixed feelings about it?
In one hand, our favourite just got a boost, recognition. In the other hand it just got a little bit more corporate, evil. A Jedi Knight who has just killed a powerful evil opponent who wasn't defending. A victory, yes, but corruption of the dark side grows. Will they be able to remain Good?
Anagram("United States of America") == "Dine out, taste a Mac, fries"
the search engine with the tiny, sparse page?
now when I do a search What I get Sounds like a Starbucks drink.
Froogle-Local-Picasa-Blogger no whip, please.
Don't be evil.
Altough I would agree that Google's main source of revenue is advertising, it's not the end-all, be-all. Google potential is in information brokerage, and that is BIG. They will collect as much information as possible and still look good doing it. People would love to "be on Google", but subject to the terms of begin on a global directory. You think that when you click a link from Google that Google forgets that it happened? Don't bet your life. They are collecting information on what you search, what you click from their site, and probably be somewhat accurate on your online habits. That's the type of information that business and governments are interested in. In fact, why do you think Google did not give the U.S. D.O.J information on porn search habits? It really not because they are trying to be good, it's because they do not want to give the information for free. Plain and simple. The knowledge is power, and the power will generate revenue.
Coderz 4 Life
You could say the same thing about television and radio.
If there were 500 before and they added Google then some is not on the index anymore.
And if we are in a new Internet bubble are there any sidebets as to when Google comes off the S&P?
You could say the same thing about television and radio.
At look where they are now. Declining ratings, falling revenues. If Google is superceeded by a better search offering, then their revenues could quickly take a tumble.
May the Maths Be with you!
pages.google.com tens of thousands of googlites with adwords on their home page?
Like Google has mission of providing good search results, S&P is about providing reliable index value. Google is representative of the IT sector and there's not much about it being 'good', 'strong', 'reliable' or anything like this. Google will be the first to go down the drain if the bubble bursts and S&P know it well - and pretty much that's why they added Google. Because it will pretty well show when the bubble bursts, resulting in accurate indication of the state of the market by S&P. Google may not like Microsoft but when people type 'MS Windows' in Google, they expect to be sent to the proper Microsoft webpage, and that's why Google keeps Microsoft scored high for these keywords in their results. Brokers watching S&P expect to see it go down when the stock is about to down really deep, so a group of companies that will go down first are likely to be listed. Google rides the tide of the net, new technologies, new developments, the leading edge - so they pretty well predict which way the market is going, stagnant, losing, gaining - they are useful as the indicator. So rejoicing or grieving about them being added to S&P doesn't matter and won't help or disturb Google all that much. It will help S&P.
Anagram("United States of America") == "Dine out, taste a Mac, fries"
This is not another internet bubble. The reason the internet bubble occurred last time was that you had biased stock analysts promoting junk stocks for technology companies with the following:
.COM bust of the last decade and that Google (so far) is not repeating the pattern.
1- NO pattern of stable growth (since many were just barely founded)
2- NO solid business plan (most of these company's business plans were just "Go public... get rich")
3- 400%+ growth in the first day (after which nearly all of their venture capitalists bailed and sold)
4- Gross over-confidence in the internet (the "just build a webpage and get rich" mentality)
Google has shown a strong stable pattern of growth, they have a prooven business plan, their VC's have not all bailed at the first sign of growth, and they understand the dynamics of the internet (better than most of us do). I'm not saying that Google is immortal (no company is), I'm just saying that we have generally learned from the
Faith is a willingness to accept something w/o complete proof and to act on it. Reason allows you to correct that faith.
Because the index is weighted by total stock valuation, the bubble stocks are over represented compared to a equal weight index like the DJIA. In the late 1990s almost a third of S&P 500 was tech-related. Some people have estimated the S&P 500 is currently over 20% real-estated-related due to the housing price bubble.
Most of you here expect GOOG to enter DJIA. No not so soon. Any Dow component is a fully matured company, in other words their growth is limited to less than 9%. I really don't want GOOG to be one of those. Let it continue to grow at 40-50% a year :-)
he's talking about dividends. Since Google is pretty hardcore about never splitting stock, you will never get any dividends by purchasing Google stock. Investing in prettymuch any other company (besides Berkshire Hathaway and a few other notable exceptions) you will have a shot at getting dividends on a semi-regular basis. That's free stocks, which translates into free money on top of the increased valuation of your stocks over time ...
m &q=l&c=%5EGSPC,%5EIXIC,%5EDJI: the results are suprising: they are only keeping up with the market. After we get over the first year of hype they are really doing no better than the aggregates. That's pretty sad. Now granted there is some volatility in there from the DOJ and the china stuff, they may rebound, but really they should be doing better. Maybe if they had stuck with the basics...
The problem here is although they are trying to model after Berkshire Hathaway, look at this 6-month trend: http://finance.yahoo.com/q/bc?s=GOOG&t=6m&l=on&z=
...and it will still outperform 80-90% of money fund managers, year-in, year-out. There is nothing to see here, at least for the S&P500.
-- Fugacity: Confusing chemists since 1908
Not sure what percentage of the S&P this will constitute but it will probably be too high for my tastes.
Don't think there's much upside left on GOOG.
Also good for us lazy investors who just buy SPYder shares.
My God, it's Full of Source!
OUTSIDE_IP=$(dig +short my.ip @outsideip.net)
According to this guy, this is a big problem with the S&P 500 index funds. When a company gets added, it's riding high. The company that gets bumped is low. So if you follow the S&P, you're selling low and buying high.
Negative. Do you receive dividends from owning your stocks? If so then you must realize that owning your stock means more than just being able to sell it to the next schmoe willing to speculate later.
Google does much business with their search appliances and outsourcing search technology. For example, a few U.S. government agencies paying big bucks to have Google appliances and custom search engines installed within their highly-sensitive intranet sites. After the installation of Google search technology within these intranets, customers were suplied with better search results, increasing productivity and other subjective user measures. Google's strength is in their search technology, and can market and deploy it, and thats one place they still have an edge over other search technology companies.
You can say the same thing about television. TV advertising revenue is declining since 2001. People no longer watch TV as much as they did (they now also idly surf the internet), and when they watch it, they watch smarter (on a TiVO, where they can easily skip the ads...).
Situation has become so bad that in Germany the currently free television stations consider changing over to a subscription model, at least as far as their satellite broadcast is concerned.
If you're concerned that much about having Google in your S&P 500 mix, you can hedge against it by shorting Google (or using a proxy like long term put options) to the extent that they are represented in your S&P 500 holdings. If Google goes up, your S&P 500 holding goes up, but the hedge goes down, and vice versa in case Google tanks. For small accounts (under $25K) this might be clumsily achieved due to the impact of transaction costs, but for decent size accounts this is a readily available risk management method.
Stop by my site where I write about ERP systems & more
> Negative. Do you receive dividends from owning your stocks? If so then you must
> realize that owning your stock means more than just being able to sell it to the
> next schmoe willing to speculate later.
And that disproves that the share price is not only a consequence of what others will pay for it how, exactly? Does that link explain how the price of a share often drops a little immediately after the dividend has been paid?
For all that can be said about them, Microsoft at least sells products as the foundation of their business. As long as people need a good (yes, XP is good for many users, this coming from a Mac fan) OS for their cheap PCs or an office suite, Microsoft has a strong position. Google, not so much. They may have the best search product, but they are dependent on online advertising, which can decline even if their engine reachs near sentient comprehension of what you really want to know.
Right now Microsfot is built on an direct-sell model. They are just one decline in sales away from having everything fall out from under them. If they are going to stay a serious contender, they need to take the corporate search market very, very seriously and make it a key component of their product offerings.
For all that can be said about them, Google at least sells both products and services as the foundation of their business. As long as people need a good (yes, Google is good for many users, this coming from a Mac fan) search engine for their cheap PCs or an email client, Google has a strong position. Microsoft, not so much. They may have the best OS product, but they are dependent on sales, which can decline even if their OS reachs near sentient comprehension of what you really want to do today.
(In case you were unaware, Google also sells products http://www.google.com/enterprise/ in addition to advertising)
Like SUNW was. And another company I forget. Something like 60% of the value of the DJIA was determined by tech stocks at that time. I never understood why they did that, I guess they wanted the DJIA to skyrocket like the NASDAQ was doing. But is the point of an index to skyrocket or to represent what the overall market (or economy) is doing?
Everyone took their eye off the ball back then. And here we go again.
http://lkml.org/lkml/2005/8/20/95
It is hard to see sometimes when it becomes a tool you use every day, that it is not intricate in your existence, it merely enhances your life. However, people led full, ignorant lives for many millenia prior to googles launch. Trust me, they do and will again.
Information is becoming ubiquitous. People who had no idea previously of interrelations are now able to "google" your ass.
Trivial stuff becomes common place (like your education and behavioual record) so what becomes important?
The items that people deem are your true worth have their own merit. Ability, integrity, things like what your actual contribution to an effort are. If you spent 2 years in your offtime coding a project because you saw worth in it, people understand your priorities.
But is Google an indicator of general behaviour? No! No more than any other. Use it as a barometer of where the sheep will go and you may have some success. In the end, it is just another company, beyond your control or influence.
Cheers
Mark
Scary, but true
Sure. But now ask the question: what will it be worth over the long term? I.e., how much will others be willing to pay for stock X 1, 3, 5 and 10 years from now?
This is the good old classic Ben Graham line about the market being a voting mechanism in the short term, and a weighing one in the long term. There are such things as short term pricing bubbles which are, in effect, pyramid schemes; they can't be sustained because it would require an infinite supply of suckers and money to keep pushing the price higher. Eventually you get to a group of late buyers who can't find anybody to sell to, and pop, there it goes.
On the other hand, real growth of a company's business puts the company in a position where it is capable of rewarding all of its shareholders equally, in proportion to how much stock they own (e.g. through dividends or repurchases). Even if people all too often band together and form an occasional speculative bubble, over the long term they can only expect to be able to find buyers who will pay for a company no more than an amount proportionate to its potential for real growth, adjusted downwards for the an estimate of its risk.
Are you adequate?
In 1999, these top-tier companies weren't making money, but you couldn't tell from their balance sheets. Have people already forgotten the accounting tricks that were utilized?
Many of these companies were showing positive EBITDA (operational profit before certain costs) at that time, because the market was just starting to demand it. Of course, it was all lies.
Google's profit is probably not lies. And even though they are completely inept with accounting and money (see their pre-IPO share registration scandal, their misstructuring of their employee stock option plans, etc.) it's also likely their profit isn't due to accounting errors either.
But it's also profit in a market with an extremely low barrier to entry, and so will require a lot of maintenance to keep that money coming to them and not their competitors.
http://lkml.org/lkml/2005/8/20/95
Even if you specifically want a fund that invests in larger US companies, there's non-S&P 500 based large-cap index funds. And if you can't easily move your money from S&P 500 funds, there's also "extended market" funds that buy everything *except* the S&P 500. These funds will now have to *sell* their Google stock, and put the proceeds into other stock.
Are you adequate?
w00t
It's a pity that the good folks at Majestic-12 choose to implement it in .NET instead of Java.
Sorry but that's just plain wrong.
When considering the risk of adding one stock to a particular portfolio (say, the S&P 500), the key determining factor is not the individual variation in the Google stock, but the covariance (http://mathworld.wolfram.com/Covariance.html) it has with all the other stocks in the portfolio already. When it comes to building a portfolio, we primarily care about the return of each stock + covariance among the stocks.
It's really easy to check this just by looking at how the variance of multiple variables (in this case, stocks) is calculated (http://mathworld.wolfram.com/Variance.html).
Do when do we get to party?
*rumages around for spandex tights*
Last I heard, over 20% of people's entertainment time is now spent on the internet, whereas only 5% of ad dollars are spent online. Most estimates expect the market to grow faster than it has been that I have heard.
I think a decrease in Google's revenue would come from increased competitive pressure, and not a decrease in the advertising industry. MSN search is actually quite nice...I hope they don't get rid of it to replace it with that POS Windows Live Search. It makes for a nice backup when I can't find what I need on Google.
Because there's no upfront fees, just pay per click, people wanting to host ads can switch their ad service company at any time based upon a whim or prospective income. And none of this requires the people visting the site (the eyeballs, and the real source of the money) to change their behavior one iota.
No, internet ad service has an even lower barrier to entry than search engines.
http://lkml.org/lkml/2005/8/20/95
If you want to post some specific examples of poor search results, I'd be happy to pass them on for someone to check out.
I posted elsewhere on this thread, but if you want to give a couple examples of searches that didn't work well, I'll ask someone to check them out..
That's fine Tim, just keep running your mouth.