OT: GOOG

Any other holders here?

I think GCP is getting traction. More discipline with the science project and spending. True share buyback with a serious CFO. Youtube a monster. High returns on capital and growing cash flow

Bear case?

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Bear case?

Regulators would be one, but that is rarely fatal.
They go after the best businesses as a rule.

About the only bear case at the moment is that it has sometimes been cheaper, but it’s an amazing business.

Jim

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Yes, the fines so far have been like gnat bites.

and agreed fully - an amazing business

<Any other holders here?>

Yes … about 2% of port

Rich (haywool) long both GOOG & GOOGL

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“Any other holders here?”

I own it (actually GOOGL, but the difference is tiny). Great company. First in search. First in AI. Good profitability. Amazing growth. The stock always sells at a high P/E, but I recently bought.

My biggest concern is not GOOG, but the broad US stock market, which will pull all stocks down when it crashes. Other attractively priced tech stocks, imo, are INTC and SWKS.

I’ve been tempted recently, but I can’t shake the price anchoring experience of missing in March 2020 because it just missed my limit order. Once it started to run, I refused to let go of my buy number.

I’m tempted but I have some concerns about valuation. Earnings took a big jump, largely on the back of a huge jump in net profit rates. If you believe that net margins will continue to hit 30%, and that revenues will continue to grow at 20% per year for another decade, then it looks like it is a bargain right now. If it would only revisit $1100!

Yes, about 2% of equity portfolio

Purchased around half of it 18 mo ago, the remainder in 2021

I’ve begun establishing a relatively large position (currently about 5% of my portfolio, I’ll got up to 10% if it drops materially from here) with the recent pullback.

It was on my list in Spring 2020 but I put the money towards DITM BRK calls. Closed those in January and have put some of it into an expected long term hold in GOOG.

I don’t see how Google isn’t substantially more profitable 5 years out as compared to today. Worst case is likely increased regulatory risks and costs (which I rate as less a danger than “China” to Apple, to take another big tech peer to which I’m indirectly exposed), but I don’t see how anyone touches their basic hold on various facets of our digital infrastructure (google it, or maybe watch a youtube video about it after you get through the ads) until well into the future. It has a very big moat, easy to understand. Not many better on that front.

Several scenarios for growth that make it a value today, even with some margin compression. They’ve gotten better about avoiding throwing money away so I like the odds. I also doubt the political will to take them on – they have the digital equivalent of buying ink by the barrel, only tenfold.

I view it as a sleep at night position. If it drops it won’t be for too long.

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I agree it is an amazing business with what seems like a very wide moat.

Anyone want to opine why Warren, Ted or Todd never bought it for Berkshire? It sure seems like a serious error of omission by not one of them but all three.

-BD

I have a 2% position and have held and added a few times since 2005. It’s a top 5 holding and just recently added a bit to both it and Amazon.

I think Warren and Charlie mentioned at the 2017 meeting that they should have bought Google along time ago and it was within their circle of confidence and were being charged $10/ click for GEICO ads but they just dropped the ball and maybe not sure it would dominate Search as it has. I agree it would be a great position within BRK and have hoped for years that they would buy it but no such luck, so I have elected to just add on my own along the way when valuation seems reasonable. Future still seems bright to me.

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Any other holders here?

About 5% of port in a tax-deferred account.

Tom

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Can someone educate me on the wisdom of a 2% position?

How can a change in that impact one’s life in any significant way?

Not meant as any criticism. I just don’t understand the logic of such small positions. How does a collection of such differ from an index fund?

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Can someone educate me on the wisdom of a 2% position?

How can a change in that impact one’s life in any significant way?

Why you think every single position has to impact one’s life?

I have a portfolio strategy, my current goal is tech 20%, financials 20%, REIT 15%, energy 10%, stalwart 10%, and cash & other sectors covers the remaining.

I have a sector view and select individual stocks and I spread sector bets across multiple names. For ex: on REIT, I like grocery anchored strip/ shopping centers, Single Family residential. or in case of energy, I have XOM, APA, and XOP (exploration), OIH (Services).

Within an sector there are sub-sectors you need names to diversify.

I accept (rather market humbled me enough) I am not a great stock picker, so I diversify across sectors and within sector various names. I don’t need to make a concentrated bet (it requires far higher skill, which I don’t have), I don’t need to beat Index, I don’t need to make any life altering money. My goal is to do at least 10% per year, irrespective of market performance, and my allocation is not bracketing Index.

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It’s my second biggest position ( double digit percentage) and I had moved a little bit of capital from Berkshire to Alphabet in 2020 when it was bounding around $1000 and so far it seems to have broadly worked out.

As others have said it is an amazing business with few realistic substitutes and the lives of billions of people are reliant on its services so the moat is one of the best ever.

In 2021, its price went up 65% while the PE ratio shrunk.

Like Berkshire it has generally traded within a zone of reasonableness rather than being at the mercy extreme swings in sentiment. One to build a decent sized stake and lock away for 5 or more years.

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Looks overvalued atm and the recent earnings hike in the past year is well above trend 3-5 year trend. $1250 a share would be a reasonable buy in price at 25 x last 3 years smoothed earnings IMO. 20x would be $1009

Can someone educate me on the wisdom of a 2% position?

How can a change in that impact one’s life in any significant way?

I think it has to do with investment style / strategy. My strategy is to try and outperform the index by a few points every year; with (and this is important) not underperforming by more than a few points. I do this by keeping 50% of my investments in index funds, and then another 20% in BRK. The other 30% is invested in smaller positions - some as small as 2% (although that would probably be the smallest).

This approach keeps me focused on around 10 stocks, which is about all I can manage.

tecmo

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Looks overvalued atm and the recent earnings hike in the past year is well above trend 3-5 year trend. $1250 a share would be a reasonable buy in price at 25 x last 3 years smoothed earnings IMO. 20x would be $1009

I tend to focus more on revenue than on earnings - they can (and have) played with their earnings (dial up and down) and it is certainly in the dial up mode right now - but it might not stay that way. Revenue is not as easy to manipulate.

Based on revenue I think a good entry point would be in the $2500 range. This is based on historical ranges that the stock has traded in. They are expected to generate over $250B in TTM revenue next quarter, if you can get them under 6x it seems like a good deal.

tecmo

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Can someone educate me on the wisdom of a 2% position?
How can a change in that impact one’s life in any significant way?

If you have 50 of them, it can make a huge difference.
Just because you have 50 positions doesn’t mean you’ll track the market.
You will if they are chosen at random, give or take. But not if they aren’t.

Jim

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“Can someone educate me on the wisdom of a 2% position?
How can a change in that impact one’s life in any significant way?”

I am an oddball as my equity portfolio has morphed into 65% Berkshire and 15% S&P. My 2% in GOOG is sizable (to me) wrt that remaining 20% portion including another focused 10 or so positions.

A little speculation is part of the fun of the game, right? Followed mungo into DLTR with a modest bet and pocketed enough to cover a nice family vacation- was fun to ring the register although it did not make a significant impact.

Part of the fun of this board is seeing how others construct their positions and make different decisions based on the same data based on their risk tolerance and age.

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Based on revenue I think a good entry point would be in the $2500 range. This is based on historical ranges that the stock has traded in.

Random data…

200 Day Moving Avg 2657.78
85% of 52 wk high 2567.00
Current price is 2719.96

So I’ll likely nibble near 2600, but 2500 would be even better…

on the same kinda basis MSFT
200 Day Moving Avg 291.56 and 85% of 52 wk high 297.50
Current price is 302.56.

So likely get some for my adult kids accounts under $300.