Guest Author - Guido Deboeck

An email box (that I keep at my website) got corrupted or overloaded with spam. As a result for a couple of weeks, no emails arrived anymore in this particular email box. The only solution according to my ISP was to erase all emails and reset. As a consequence I may have lost some important mail. When this occurred last week I looked into moving my email box to Google under the assumption that Google is better at filtering spam and thus opened a GMail account. The switch was really very easy and within an hour or so I had all my contacts loaded in Gmail; send a note to friends to inform them about my new email address etc.

Before finishing I looked at other Google Products and was amazed with the wide scope and variety of products (including the experimental ideas that you can find under Google Labs) now available for free.

I quickly moved my calendar to Google Calendar; downloaded Picasa to share photos; setup iGoogle with my own selection of information topics collected from various web pages; checked out some specialized search engines such as Scholar and looked at photos of the surface of Mars (Google Mars). In sum, I started to think in terms of “google-izing" my life!

This morning (7/20/07) IBD reported that Google shares dove, Google had missed profit views; on CNBC a talking head said: “market is down because Google disappoints”!

In the IBD article it said that Google reported earnings of $3.56 per share, earnings were up 43% compared to the same quarter last year, sales grew at 63%, overall cost were somewhat higher (because Google had hired more people) and Google retained 27.4% of all ad dollars spend online.

Those numbers do not seem to be a major problem! They do not give me the feel that Google has come to the end of the road. Why then a 7% nosedive of its stock price? The “big news” (or reason for the stock drop) was that “the earnings of Google were 3 cents below what the analysts had expected”. Do you really buy that?

A common sense interpretation is that these “disappointing earnings” (3 cents below expectations) was the excuse for traders to take some profit. Google had gone up from $457 in mid May to $558 a couple of days ago, that is a 22% rise in 2 months time! Remember not everyone in the market is "a long term investor". Some are hired to make money from every wiggle in the market.

For Google to drop 7% after a 22% rise in just 8 weeks is perfectly normal. Actually it may happen again, since “analysts are now expecting earnings to rise by 43.5% and sales to grow by 54% from the year before in the next quarter". Just suppose that those smart analysts are off again...Does anyone reflect for a moment on what it means to grow earnings at 43% or sales at 54% quarter after quarter?

What is the most sensible investment strategy in these circumstances? First, ignore all predictions by market analysts -- they don't work for you; they are paid to come up with numbers, not to be accurate! Second, ask yourself if the fundamentals of a company like Google are improving or getting worse? Third have the guts to act out of the box: meaning buy instead of sell!

Google’s "nosedive of today" was a great opportunity to add shares of a company that is virtually impossible to predict where it may be next year this time. One thing I am certain off is that by this time next year, my life and work will be even more googlized than it is today.

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