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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/
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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.
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.
> 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.
Standard & Poors 500 - a group of stocks that are chosen to represent the movement of the overall market. It's a better indicator than the Dow Jones index, which is only about 30 stocks.
As for Google joining the S&P, it doesn't mean anything other than a momentary blip on the stock price. It's an inflated stock which doesn't pay a dividend and is traded far over it's revenue. Personally, I wouldn't touch the stock, especially because not only is it overvalued, but the company could very easily be displaced by another company who comes along and does a better job. It's not like a group of college kids can get together and form a competitor to Exxon or Coca Cola, but they sure could threaten Google. It's just that the average, non-technical person wants to get on the next Big Thing Train and they've heard of Google, they probably use the search engine, so they buy the stock.
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.
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"
Burlington Resources won't be listed anymore on the S&P 500 because they're being acquired by ConocoPhilips(also on the S&P500), so they're not really "leaving".
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Wow. I've heard of not reading TFA, but who doesn't even bother to read the first sentence of the article summary?
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=
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.
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.
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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?