Google is a buy-to-hold!

There are stocks to trade and stocks to buy-and-hold

Google is a buy-and-hold!

Here are two different articles about Google’s fourth-quarter results announced at 4:15 p.m. 1-31-06.

The New York Times correctly points out the dramatic movement of Google’s stock. But if a $45 stock drops $4.50 or 10%, the move hardly evokes comment. If a $450 stock drops $45, surely, something earth shattering has happened. Piper Jaffray’s Safa Rashtchy attributes this movement to “momentum players.” I think when a zero is added to a stock price, the stock holders get nervous. Berkshire Hathaway holders BRKA have experienced a three month ride from $86,000 to $91,000 with the stock closing 1-31-06 at $89,490. Search the web or listen to CNBC for comments on the movement of BRKA and the results will yield little. Why? Investors don’t trade BRKA in any volume that matters. How do investors use their BRKA shares? They borrow against them. (Remember: Sergey Brin and Larry Page, Google’s founders, pay tribute to Warren Buffett and the Berkshire Hathaway model.) Brin and Page want investors to make Google a buy-and-hold investment like BRKA. So what should you do? Buy-and-hold! Let me say that again. Buy-and-hold! Even ten shares of BRKA at $89,490 each are worth $894,900. Could Google reach such heights? Microsoft opened at $28 on Thursday, March 13, 1986. Its split factor is 288:1. 100 shares purchased for $2,800 on 3/13/1986 with a buy-and-hold strategy would be 28,800 shares worth $810,720 on 1/31/06. One MSFT share unsplit ($28.15 times 288) closed 1-31-06 at $8,107 up $475 a share from $7,632 on 1/26/06.

The Business Week takes a different tack emphasizing “single source” revenue concerns. What a shame, Google’s net income rose 82%, to $372 million. “Revenue diversity,” hmm, maybe Google should go into the airline business. United will be coming out of bankruptcy soon. What about the auto industry? If my dad in the 1960s’s had just used the buy-and-hold strategy to buy BRKA and, say, accumulated 1000 shares, at today’s $89,490 a share for a total of 89,490,000, my sister and I would be very happy and keep mom and dad’s picture in a real silver frame. Revenue diversity, why?