Why is it a Good Idea to Invest in Google?
After a long chat with my buddy Kevin last night, I purchased two shares of Google (GOOG).
Why?
I ask you: why not? :) Yes I understand that Google is nearly $500/share right now. But Kevin had me convinced. He has a good argument. All of us investors at one point or
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another consider purchasing Google. But it just never seems the right time, either it’s too high or … it’s too high.
Kevin’s argument is that a company like Google is comparable to Berkshire Hathaway (BRK-A) in that significant growth occurs over a very long period of time. From Wikipedia,
“The Company (Berkshire Hathaway) averaged a phenomenal 25%+ annual return to its shareholders for the last 25 years while employing large amounts of capital and minimal debt.”
Fact: Berkshire Hathaway was in the $5000/share range back in 1990 and at the time of this post, its stock price is $106,875/share.
$106,875 / share!
Let’s say I had two shares back in 1990:
2 shares x (106,875 - 5000) = $203,750 profit in sixteen years
(about $12,700/year gain)
Berkshire Hathaway Stock Price, 1990-2006
Is Kevin suggesting that people who invest in Google now will be rich off their asses ten years down the road? No. Well maybe. But if you think of it as a CD account, what is there to lose? That is, if you believe that Google’s around to stay for awhile and that it will sustain/increase its power and success, it doesn’t hurt to drop half a grand of your next paycheck into the Google machine. Let it sit.
Part of this is gut feeling, investing in a quality product that you and your friends use frequently. For people in my generation, Apple, Google, YouTube, Facebook.. these guys all fit the parameters.
*These are just personal opinions, no recommendation has been made in this post.
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Tags: Google, Berkshire Hathaway, stock
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November 7th, 2006 at 1:20 pm
Couldn’t have said it better myself.
November 7th, 2006 at 1:40 pm
[…] Google Invest […]
November 7th, 2006 at 9:26 pm
uh, time to save up some money
great idea!
November 8th, 2006 at 11:46 am
Welcome to poverty!
November 13th, 2006 at 3:21 pm
Recently, I took a tour of Google…Besides rummaging through people’s workspace, eating and drinking at their expense, and mashing on a moped, I got to pick some people’s brains. Great investment; I can already envision a GoogleLand themepark.
January 4th, 2007 at 9:08 pm
But who knew anything about Berkshire Hathaway 25 years ago? Hardly anyone… The time to invest for big returns is before everyone knows about the company… and if you have not heard about Google, you’ve been living on Mars for the last decade. Stock go up because new buyers buy… stocks go down because old buyers sell. Google does not have a lot of room to find new buyers, but there sure are a lot of owners who could sell.
The trick to making money in the stock market is to buy tomorrows big thing today, like the people who bought GOOG for less than $100 when it wnet public. Ask yourself: What is everyone going to be excited about in 2008? Then buy it.
January 5th, 2007 at 2:55 am
Tom, I agree that in order to make $, one must purchase tomorrow’s big thing. Although Google’s stock price is pretty steep right now, one might’ve said the same thing a year ago. Either way, it’s a gamble/commitment to invest now.
Thanks for the comment!
January 30th, 2007 at 3:26 pm
[…] Google started to make its presence in the radio industry. Remember that post on the “Purchase-1-Share-of-Google-Stock” Philosophy? Let’s make it a bit clearer why investing in Google is a smart idea. I can guarantee you […]
February 17th, 2007 at 5:48 am
Hey Tony,
2 shares x (106,875 - 5000) = $101,875 profit
It’s $203,750 and not $101,875!
That’s about $17,000 gain every year. :)
February 17th, 2007 at 10:45 am
I must’ve been drunk when writing this ;) I’m surprised no one caught it earlier. G
Good catch Martin!
August 14th, 2007 at 8:03 am
[…] (GOOG) (20%) I believe in the Goog monster, it will keep rising. Read this post for my […]
October 9th, 2007 at 3:19 am
[…] for the first time hit $160 yesterday and Google broke $600. (here’s some background on why I invested in Google) I think this is another testament to my belief of investing in the companies that create the […]
October 10th, 2007 at 7:29 am
How do I buy 2 google shares?
Thanks!
October 10th, 2007 at 8:43 am
Carlos, basically you need to open an account with a stock broker (e.g. Scottrade, Etrade, Ameritrade, etc.).
I personally use Scottrade for their low priced commission charges.
November 1st, 2007 at 8:29 am
[…] I wrote a post before about why one should invest in Google. I still own two shares valued at around $470. I will still be patient and hold. Google is one simply one of those golden companies that make the right decisions and release the right products. […]
November 13th, 2007 at 5:49 pm
hi tony
just a question, i want to buy a share, can you recommend me a place where i can do this?
thanks!