Just a little technical speculation: AFAIK, Google relies on a network of cheap decentralized PCs spread all over the world. If one breaks down, it's cheap to replace it. Now we've seen the rise of Linux, P2P networks as well as wikipedia.com , where non-commercial users have bundled their resources and capacities in order to build decentralized networks. If you've followed projects such as seti@home or similar projects, think about the following: why shouldn't private users decide to build a non-commercial, decentralized search engine in the not so distant future? Also, one of googles main advertising partners so far is/was ebay. Couple of days ago, ebay bought shopping.com, IOW, their own search engine. Actually, google's business model strongly reminds me of a similar company that was founded a few years ago Edit: I think the most important bubble to follow currently is the housing bubble in the US & UK
-Update- We are hearing from multiple sources that a prominent NY hedge fund had to recently cover a large short position in GOOG, which may have helped fuel strength in the name over the past week. According to contacts, today's weakness in the name is believed to be a sign that these short positions have already been covered, and the stock has run out of gas temporarily. from briefing.com
They might, or maybe should have, worded that to say a "once prominent" hedge fund............ I thought these guys were smart? Why not go down to the RR xing and stand in front of the 5:15 to see if you can stop it. There are a lot of smart people talking a lot of indicators, strategies, etc., but a little dose of common sense would have gone a long way.
I read about a study published a few weeks ago from Watson Wyatt consultants ("capacity in the hedge fund industry"). According to them, there are only about 5-10% highly qualified hedge fund managers who are able to achieve significant returns after commissions. This means that there are only about 300-600 top hedge-fund managers worldwide who could manage an additional 75-150 billion $ successfully. It's all about the commissions. The returns hedge funds and other asset managers make with secret kickback agreements with their brokers are certainly much higher than what they can achieve with profit participation. So, even if that hedge fund blew up, it certainly made a killing just through the commissions. Customer pays the price.
Google Short-Cover Buzz 6/3/05 12:49 PM ET There is some interesting rumor making the rounds today about a rogue trading scandal at a well-known hedge fund. Supposedly there was a large Google (GOOG:Nasdaq) short position with a huge loss that was hidden. The firm uncovered it and now is forced to cover the short for a huge loss. The scandal, it there really is one, isn't significant enough to have an impact on the market but likely would generate some press if true. I see some comments hinting at this elsewhere and thought I'd pass it along for those who read the National Enquirer at lunch like I do. Real money comment Stupid AND dishonest. tsk, tsk.
It's trading at about the same p/e to next year's estimated earnings as amazon is. If the estimates are correct, that doesn't seem too out of line to me. (Disclaimer - Im not a fundamentalist)
Flytiger Sounds like this may be related. From briefing; The Circle T Fund released the following letter to its investors "At 12:30 P.M., on June 1, 2005, we determined that the firm was the victim of unauthorized trading activity. We further determined that the misconduct was attributable to one trader. Immediately upon identifying the open trades in question, we took appropriate action to close out those unauthorized trades. The individual in question has been terminated and his trading authority cancelled. We have notified the SEC of this matter. We believe we have quantified the amount of the losses attributable to those unauthorized trades as less than 10% of the assets of the funds for which this individual traded... The firm's liquidity remains unimpaired and we continue to conduct business as usual."
Soon he will have sold all his shares. Then he will start a competitor to Google, called Shmoogle, and do it all over again.