The Boston Diaries

The ongoing saga of a programmer who doesn't live in Boston, nor does he even like Boston, but yet named his weblog/journal “The Boston Diaries.”

Go figure.

Thursday, March 30, 2006

Charles Ponzi would be so proud

Google's stock has rebounded strongly since the S&P 500 inclusion announcement (going from about $340 to $395 in under a week). With already 8 BILLION dollars in the bank, Google just filed to sell 5.3 million more shares, which may add another 2.1 billion to the cash hoard. They also announced they completed the AOL deal.

Google Nears $400—Completes AOL Deal, Files to Sell More Stock!

The more I read about Google stock, the less I understand it. No dividends, no voting rights, yet a few billion dollars worth of stock is trading hands daily (and according to this calculation it adds up to about 15% of the GDP of the US (only it's not really counted).

OK look. What this means in real terms: 5 times more money is traded JUST IN STOCK BUYS/SELLS each day in GOOG than their entire yearly net profit. THAT is insane. If I were a GOOG employee who had my raises regulated to GOOG stock options (apparently they don't even own stocks they get a "goog coupon" to buy stocks over 4 years if their performance is good.), I'd be seriously stressing; and that would certainly hurt my job performance.

Stock Calculus (emphasis in original)

I know my Dad would say this is operating purely on the “Larger Sucker Theory” of stocks (which he also claims is a form of legalized gambling) whose only value is that which is perceived, but come on! At least other stocks give the some impression of being worth more than the iron oxide coating on some harddrives storing the ownership information (actual paper certificates? How 19th Century!). But GOOG? People actually buy it?

Then again, the explanation may lie in our crumbling educational system …

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