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Google to be Added to S&P 500 Index

Posted by ryuzaki0 on from the finally-arrived dept.

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."

19 of 148 comments (clear)

  1. Good News by gurutc · · Score: 3, Insightful

    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
    1. Re:Good News by nelsonal · · Score: 3, Informative

      MSFT and INTC are both in the Dow Jones Industrial Average even though they are not listed on the NYSE. The Dow isn't exactly your folks' Dow anymore. Ironically, they are both getting closer to being the dogs of the Dow, anyone want to give odds on when that happens?

      --
      Degaussing scares the bad magnetism out of the monitor and fills it with good karma.
    2. Re:Good News by stecoop · · Score: 4, Insightful

      This might seem to be good news on the surface but let's look into the ramification of this. First would you buy any stock with a P/E > 50? I believe it is foolish and very risky to do so. Now the problem is that I own almost all of my investments in S/P 500. Hmmm - I will be indirectly buying this stock I don't want because it is a component of the 500; thus, to mirror the index my Mutual funds will have to start picking up Google. Crap, now I beleive the 500 is a slighlty higher risk investment now with Google then before without it and it dons't seem to follow my investment goals.

  2. Follow it all by JustOK · · Score: 3, Funny

    follow it all on http://finance.google.com/

    --
    rewriting history since 2109
  3. Google embodies the S&P by BadAnalogyGuy · · Score: 5, Funny

    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.

  4. More info by DavidHOzAu · · Score: 3, Informative

    From Bloomberg

  5. It's 1999 all over again by hadj · · Score: 5, Interesting

    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.

    1. Re:It's 1999 all over again by Bemmu · · Score: 5, Interesting

      And there are some interesting contenders out there. Google tends to forget that there are people living outside the US, UK and China. I'm sure they are getting there, but while they linger there are others moving into attack positions. The local ones mentioned before are eating away their user share, since they can take into account location & language specific things that Google may be ignoring while pursuing it's grand world domination plan. In some languages a simple word by word matching scheme may not be enough and conjugation needs to be considered as well. Google has also upset some folks with the China censorship thingy and wanting to move all the users' data on their centralized servers, in general displaying the sort of arrogant behavior that slowly makes people want to see them fail.

      Perhaps the most interesting engine to flock to would be http://www.majestic12.co.uk/, a seti@home style distributed indexing system. Sure they're not to Google's index size yet, but they are getting there, faster and faster... and the fairness of their ranking algorithms are open to view and discuss -- perhaps with time such closed algorithms could be viewed with as much dislike as Microsoft's closed OS sources. I wonder if Stallman is using it.

      I am not a Google hater myself, personally I feel their search engine is adequate for my needs and their goal of organizing the world's information a very appealing one (although so broad that they might as well have said "we'll do what we please"). All I am saying is that it would not be unthinkable that the public opinion might slowly change, not favorably for them.

    2. Re:It's 1999 all over again by grahamlee · · Score: 5, Funny

      Specifically, it's Bubble 2.0 (which is AJAX-enabled and speaks XML-RPC and SOAP)

    3. Re:It's 1999 all over again by TheBogie · · Score: 5, Informative
      This is not exactly like 1999, in that Google actually makes money.

      Their gross profit last quarter was $372,208,000 http://finance.yahoo.com/q/is?s=GOOG .

      In 1999 almost all of the internet companies had yet to have their first profitable quarter.

    4. Re:It's 1999 all over again by Luscious868 · · Score: 3, Insightful
      This is a market which can turn upside down in a second.

      I would take it a step further. I would say it's a market that can, and will, turn upside down at some point. Google keeps expanding and, IMHO, keeps taking their eye off the prize. I'm increasingly having to go deeper and deeper into the search results to find the information I'm looking for and that doesn't bode well. That's exactly why I started using Google in the first place, to find what I was looking for and find it quickly. If some other search engine comes along that does it better, I'll switch in a heartbeat and I know I'm not alone. If I was, Google wouldn't be nearly as popular as it is now because almost every Windows user would stick with the MSN search that IE defaults to. I would argue that people don't use Google because it's Google, people use Google because it works. They are a website, not an OS, and unlike Microsoft people can and will change if somebody comes along that does it better.

    5. Re:It's 1999 all over again by randomjohndoe · · Score: 5, Interesting

      >Perhaps the most interesting engine to flock to would be http://www.majestic12.co.uk/, a seti@home style distributed indexing system.

      Now that is an interesting concept. Indexing the web would seem to be the kind of parallel operation ideally suited for distributed computing. You'd still need a central server to search the index and provide results quickly. (Okay, I decided to RTFL rather than just speculate, and I see that's what they're doing.) My initial assessment is that this is the most credible medium term threat to Google I've seen.

      >...the fairness of their ranking algorithms are open to view and discuss -- perhaps with time such closed algorithms could be viewed with as much dislike as Microsoft's closed OS sources

      Another excellent point. I wish I still had mod points. The closed nature of Google's ranking algorithms has disgruntled some folks, and an open system could become popular. Robert Cringely did a series on the mysterious workings of the AdWords algorithm, and whether Google is using the algorithms to "unfair" advantage. "Unfair" being quoted because even if they are doing it, it is not illegal, and perhaps not even unethical. But they could be deceiving or "gouging" (another loaded term) their advertisers, and it could be seen as counter to "Don't be evil". Cringely includes Google responses.

      The point is, the advantages of open algorithms are pretty obvious.

      http://www.pbs.org/cringely/pulpit/pulpit20050922. html
      http://www.pbs.org/cringely/pulpit/pulpit20051006. html
      http://www.pbs.org/cringely/pulpit/pulpit20051013. html

  6. Is this really a good thing? by the_humeister · · Score: 4, Insightful

    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.

  7. Google is built on a foundation of sand right now by MikeRT · · Score: 4, Insightful

    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.

  8. Re:S&P? by silverbax · · Score: 3, Interesting

    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.

  9. remember Google? by i_am_the_r00t · · Score: 5, Funny

    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.

  10. Re:So Who Got Bumped? by macadamia_harold · · Score: 4, Informative

    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".

    --
    Push Button, Receive Bacon
  11. Let god forbid GOOG in DJIA. by cpatil · · Score: 3, Informative

    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 :-)

  12. Sell low, buy high? by jackjumper · · Score: 4, Insightful

    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.