I am finishing up on the excellent Reminiscences of a Stock Operator, a book by a trader at the turn of the 20th century. The book highlights just how little has changed in a hundred years and one of the axioms that is relevant today is: In a bull market, good news is amplified and bad news ignored. And conversely, in a bear market, good news is ignored and bad news amplified.
With Google ‘blowing’ their second quarter results, clearly we are in a bear market.
This is a company whose owned and operated properties are growing 42% year over year, which is quite stunning when compared to the likes of Yahoo and MSN, who have both been posting pathetic performance.
The second quarter is always the weakest in terms of sequential growth (and the fourth quarter always the best) and it is funny to see the constant goldfish-like surprise each year when investors react to the results.
Another interesting point is the use of the words “challenging macro-economic conditions”, which I expect every management-speak corporate officer to quickly append to their vocabulary in the coming year. After which, they can be “cautiously optimistic” about the recovery.
Net-net, Google is still banging out home runs in a crumby economy and the news is about to get worse for a whole host of other online ad firms.
Niki -
Great book. Allen & Company gave it to me and the rest of the summer analyst class back a million years ago when I worked there. I remember finding it fascinating back then — I’d probably get even more out of it now.
I should probably re-read it.
Bonjour