Google has inflated Earnings!

Google has inflated earnings, not in an accounting scam kind of way, but in a nostalgia kind of way.

Google is hot right now...their stock remains hot, their earnings continue to beat estimates. As long as their earnings come in stronger than expected they will keep having their stock balloon up, perhaps to the four digit stratosphere.

But there are other angles to consider. I would consider shorting Google...that is I would short google if I were a speculator, which I've already established that I need certainity and not guesses to make investments.

WHAT?!?! DID SOMEONE SAY THE WOULD SHORT GOOGLE? DID SOMEONE WHO CLAIMS TO BE IN LOVE WITH GOOGLE SAY THAT HE WOULD SHORT THEIR STOCK?

yes. I came up with this theory that google has high earnings because everyone is trying them out. Everyone and their mother are trying out adsense (which is how google makes money), but there is no hard evidence to support that clicking on the ad above this post actually consistently generates cash for anyone other than me and google. So people are probably paying too much for the banner ad leads. Hell if you click on the above ad, I might make as much as 2 bucks. But you probably didn't buy anything. Do you see the disconnect of value here. People are paying for leads to sites that may not result into the conversion of cash purchases.

You can equate it to Ty. Everyone was buying Beanie Babies a few years ago (which started ebaY!) for no other reason than everyone was talking about beanie babies. Did that mean Ty would hang around and dominate the stuffed animal world? Hell no...it just meant that the media was doing advertising on behalf of Ty. As long as Beanie Babies were in the spotlight, people would pay a few hundred bucks for them. Similiarly everyone is paying for adsense ads which increases google's earnings, which increases google stock price. Its a terribly vicious cycle.

Google is still a toddler. They are not even 10 years old. Never mind Microsoft being a more formidable competitor, I am now afraid of google competing with nostalgia. I've said that all along about their stock price, but stock price is driven over time by a companies earnings....and people may be giving Google very high earnings for no other reason than to try it out. Think of it like this: "People are paying for adsense ads because they think that if this many people are talking about google, than it must be good." The same logic can be applied to Britney Spears.

Don't believe me? My sister told me that the company she is working for tried adsense and were disappointed by the results. Just wait until 1 million other advertisers agree. As long as click throughs turn into cash, google will be fine. But do click throughs turn into as much cash as we've seen out of google over the last few years? If so...fear Microsoft and Yahoo and Ebay and Amazon chasing Google's marketshare.

If I gambled, I would short google with a 12-24 time horizon.