Question: I know you're a big fan of Google. But would you recommend buying Google stock?
E.C. Albany NY
Answer Marc Charles:
And here's why......
As you may or may not know, I spent considerable time in the "trenches" as a commodity and currency trader. I made my living trading in the markets.
I learned many valuable lessons. But one stands out more than any other lesson.
I call it the "Carpet Theory".
It means the carpet can be pulled out form underneath you at any time, for any reason, without logic and for no technical reason. It is the nature of the market when people are involved.
Another theory is everything moves in waves or cycles.
I know....I know.....millions of so called experts disagree.
But I think things move in cycles.
And most cycles look like a triangle.....things go up at an angle, peak, and then go down to the base....like a triangle.
The trick is knowing when something has "peaked". But you can use historical price charts for a clue.....say 50 or 100 year charts.
In Google's case they haven't been around for 50 years, like many other companies.
But when I look at a chart of Google stock over ten years...it "looks like" the stock has peaked or will peak soon.
Granted, it's just an opinion. But if I were trading Google stock I would sell call options slightly higher than the current price.
As far as buying it at $550 per share expecting it to go to $600, $700 or $1000 per share in the next few months or years......I think this is an unwise investment.
That's what I think.
I hope that helps.