Just want to point something out about Google and crystal balls

Ramit Sethi · January 20th, 2006

Ok, so the news is out: Google stock fell about 8.5% in its “largest single-day loss ever” today. Oh no!!!!! Is the Internet advertising market over? Or is it just a slight correction??

I don’t know, and neither does anyone else. I just want to point this out: When Google releases its numbers on January 30, the stock will either go up or down. And about 20 minutes afterwards, the pundits will start to talk as if they knew exactly what was going to happen…

If GOOG falls: People will start saying things like “I knew the advertising market was overvalued, and so was Google!!”

Quiz: What is your earning potential? Choose the answer you agree with the most
View Results

If GOOG rises: “I knew that it was just a small market correction and that it was going to go up!”

No they didn’t, or they would have bought/sold Google right away. Think about this today, January 20: Nobody knows a damn thing about what’s going to happen in 10 days. But stay tuned, because it’ll be hindsight bias at its best.

Do you know your actual earning potential?

Get started with the Earning Potential quiz. Get a custom report based on your unique strengths, and discover how to start making extra money — in as little as an hour.

Start The Quiz

Takes 3 min


  1. I personally believe in Google.

    I’ve got 3 shares right now, which were up, but are a bit down as of today.

    I plan to buy another 6 as soon as their stock stops falling for a bit.

    And I believe that GOOG will rise on the 30th, but if it doesn’t, no big.

    I’ll hold the shares for a year, two years, whatever.

    Basically, Larry and Sergey are young, energetic, and still hungry. They’ll fight to the death for their company.

    In my opinion, this is a much better prospect than any other company at this time.

  2. Jonathan Radande

    As much as I love google and its services, I seriously think that the stock is overvalued.

    I guess we’ll find out on the 30th.

  3. Florencio Cano

    I think in some cases technical analysis are useful. For example in the case of Google, will you continue buying although Google continues going down because good fundamentals?

  4. TechnoBalance


    I am visiting this site for a while and I have to say that you are one of the smartest people I have ever met online.

    About google and Internet marketing you are right I would translate it as “watch-out”

    Very good post indeed!

  5. Dave Kaminski

    the stock is a bit too expensive in my opinion. It has a high earnings multiple for its cost. It’s just adjusting to what it should be at. It has never been an undervalued stock since it was established. The stock went up because of speculation in growth of earnings per share and the multiple was too high for its earnings.

  6. If you use Yahoo Portfolio services it automatically gives you news on the stocks and indices you follow, and the news pieces are hilariously predictable.

    Pretty much every time the NIKKEI, S&P, FTSE etc rises, you get “NIKKEI ends the day up on bargain-hunting”. If the market is down, “NIKKEI ends the day down on profit-taking”.

  7. Joe Martinez

    Google was down because of subpoena refusal and that whole mess.

    I really like this blog, write more.

  8. Gualberto Daiz

    I took the opportunity to pick up some options on Friday. I’m not a big fan of Google, but I’m going to ride the wave for as long as I can. I don’t think they’ll start disappointing the Street just yet.

  9. theCreator

    My bet it that they’ll do just fine.
    Just look at the rebound this week

  10. Hi, I discovered your blog a few days ago. It’s not exactly aimed at me (it appears I’ve slipped out of the 20-something demographic without noticing), but I’m finding it very interesting and digestible.

    Anyway, I’ve got a question you might be able to answer. On this chart:

    why do Google and Yahoo appear to match each other? Naively, I would expect that what is good for one would be bad for another, and that as one rises the other would fall. Clearly I’m wrong, but why?

  11. Kirubakaran

    I bought GOOG when it dropped – got in at $405. It dropped further, of course, but now I am sitting on a tidy profit 🙂