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3 O'Clock High: Beautiful Girls Mailbag


"Sometimes you just gotta say 'What the Heck'"

Minyan "The Earl of" Bruce writes:

In your June 30th piece "The Halfway Point Hoofy Awards" you made a quick mention of the GOOG (I'll let you check it out for the meantime I am going to archive the balance of your articles prior to you announcing you owned the stock).

What looks so different about the chart today than it did 7 months ago? ... 14 months ago? ... I am just curious. Because they are basically a company that has some cool free stuff and basically generate their revenue from banner ads and selling content space, right?

You know what they say ... Sometimes it's better to be lucky than good.

- Earl

PS - I went to see Stanford and Oregon State hoop it up last week ... beautiful campus ... and the ugliest women on earth.


At the risk of dissuading you from running through my archives, I'm happy to share my backstory with the Google (GOOG) position. It has nothing to do with Luck (I'm the luckiest guy in the world for which I'm enormously grateful but terrified of somehow jinxing) or my being Good (which isn't for me to say, one way or the other).

It has everything to do with a beautiful woman who, as it happens, is also the lovely Mrs. Jeffmacke.

Shortly after Google went public, my wife inquired about me buying some shares for her personal account. My response, only slightly paraphrased, was "they are basically a company that has some cool free stuff... they generate their revenue from banner ads and selling content space".

My wife's response to what I freely admit is a compelling anti-Google argument was "so what? I bet the stock goes up."

Having effectively staked our "I told you So" claims, I more or less ignored the stock until last summer, when I was asked to debate the merits of owning Google vs. Ebay (EBAY) for the last half of 2005. I took the pro-Google side of the "Stock Trial" vs. Mike Holland, mostly because none of the other regulars would do it.

Not being Clarence Darrow my entire defense of Google was a slight modification of Mrs. Macke's "I don't even care what they do, the stock is going higher" observation.

By the waning months of '05 with Google's stock in the $400 area two things had become clear. First, I was going to win my Stock Trial. Second, beating Mike Holland in a No-Stakes TV debate (aired on July 4th) wasn't going to stop my wife from claiming her own victory against me. In as much as I don't live with Mike Holland, I was feeling the pain of my "loss" much more than I was feeling the joy of my televised triumph.

[Note: My feelings could have been predicted had I thought to employ any of my rather expensive education as a Psych Major.]

So, with my having already missed a double from where my wife first made her "stock pick", and having missed a 33% move in Google since my televised turn as Perry Mason, I capitulated to my wife and bought shares at around the $400 level.

What had changed was that the stock looked worse technically and the company was even more overvalued (arguably) in a fundamental sense. The only change in my thinking was that I fully embraced the notion of Google as a bubble stock. Having thus gotten cozy with the idea I was able to buy the stock.

The lesson of the bubble wasn't "Don't speculate in high-risk stocks". From what I recall and saw in the bubble, there is actually quite a bit of money to be made speculating. Making money, after all, is the Big Idea of trading for a living.

For my money the Lesson of the bubble was one of simple understanding of what you are doing and the dangers of falling in love. Yahoo (YHOO) didn't go to $400 then suddenly open at $40 on April 1st of 2000. Like most of the bubble names, Yahoo broke in a series of hideous fits and starts.

I'm not being (entirely) flip in owning and writing about Google. I fully expect the stock, in time, to roll-over and obliterate the "Buy every dip cuz this time is different" believers. I'm not "investing" in Google and, indeed, I'm trying specifically NOT to overthink the name at all.

My point is that Google's stock isn't the enemy of financial markets. It isn't a harrowing glimpse of the madness of crowds. It's a stock with a good chart and management with a demonstrated commitment to pleasing the Street, if at all possible.

I'm not in love with the stock. Google is a trading Fling and one that my wife not only doesn't object to, she's all but insistent that I have it.

So, I can please the wife, the chart looks good and stop-loss which Todd-O keeps harping on is in place (albeit still for sissies), keeping the risk in check. It doesn't make me lucky or good but it seems to be working out so far.

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