Thursday, September 23, 2010

Even More Tempting

On July 16th I opined (hoped) that Google shares had decent prospects, despite the company's second quarter earnings disappointment. I also thought that GOOG had more upside than AAPL, which I also own. Since then both stocks have increased more than 12%, outperforming both the Dow and NASDAQ.

Google's Android system for mobile phones continues to gain adherents. The latest rumor is that Facebook, which promises to have the hottest IPO since, well, Google, will introduce its own mobile handset.

Meanwhile Apple shares continue to rise into the ionosphere, as analysts fall over themselves raising their price targets into the high $300's. At those levels Apple will easily surpass Exxon-Mobil to become the most valuable company in the world.

As to when Apple will begin to look moldy I haven't the slightest idea. Several years ago I put in an Apple sell order at $70 but then pulled it back when a family member thought that it still had room to run. (In contract bridge one peek is worth two finesses, and in investments a woman's intuition is worth 100 pages of financial analysis.) I thought the iPod craze had run its course, which was arguably correct. I just didn't know about the phone and tablet computer sprouting in the lab.

Another and very recent example that one shouldn't look to me for investment advice is my experience with another Internet stock. Loving the company but nervous about its price-earnings ratio of 56, I took a small profit in Amazon a couple of weeks ago at $135 per share. AMZN immediately went on a tear and as of this writing is at an all-time high of $155.92 at a PE of 64.

Predictions that stocks will crash and burn look increasingly remote. Cash that earns a pittance burns a hole in my pocket as Amazon, Apple, and Netflix float ever higher. Thus the cruel temptress lures us to our doom. © 2010 Stephen Yuen

No comments: