10/18/2012: GARY ON NATIONALLY SYNDICATED INVESTORS EDGE RADIO BROADCAST

[email_link]

https://archives.warpradio.com/btr/InvestorsEdge/101818.mp3

JUST LETTING YOU KNOW

Google was supposed to report earnings at 4:30p ET today.

And as I was watching my screens and doing whatever I do, I watched Google go from down a buck, to down 18 in seconds. And I did not know what was going on. I then went to a screen which gives me updates of news, and I saw that all kinds of reports about Google were coming out. Their earnings, their clicks, the whole works. The stocked dropped 70…I think it was down 62 or 63 and it stopped trading. It opened up later in the day and they finally reported their earnings or confirmed them at 4:30 today.

For those who do not know here is what happened.

RR Donnelley is the agent of Google which was supposed to post the earnings at 4:30. Somebody made a mistake. Somebody’s going to be fired today obviously. So they came out middle of the day. People that owned it were thinking about whether “I’m going to hold it into the close…What should I do?…I’m screwed…”

And I don’t know what to tell you beyond that. In the aftermarket, Google was 695, down 56.61 for the day, which is like a 76 dollar stock that drops 5 ½ or 6 dollars. I think it was $18 billion off the market cap of Google.

The story is that they missed estimates by a huge margin and obviously the stock took a big hit.  I owned Google stock up until about 2 or 3 weeks ago. I sold because it trigged a sell rule in what I do. I must you. Yesterday, I was contemplating buying it back because I had a really nice cushion in it because I bought it nicely cheaper. And I didn’t. I said let’s see happens. If it gaps up 50 bucks, eh what can you do?

Why am I bringing that up? Because if I owned Google stock right now or if I bought Google stock in the past couple weeks, I’d be really po’d. And let me explain why.

Google is a front and center stock. It is a widely known and widely held institutional growth stock. Like most companies, Google would know before the end of a quarter how they are going to miss the top and bottom line. And if they don’t know the last couple weeks of a quarter, certainly they would know in last couple of days as a quarter ends. Their quarter ended September 30. It is now October 18. For 18 days people were buying Google stock based on a certain estimate that Google had, provided by analysts with guidance from Google.  Oops. Supposedly there’s no guidance any more.

Right.

For 18 days…let’s give it 4-day fudge factor…for 14 days, people were buying Google while the people at Google knew that they missed estimates by a wide margin and potentially anybody that has been buying the past two weeks is going to lose some good cheese.

This should have been a pre-announcement. This happens all the time. Companies recognize that there’s guidance and estimates out there. And they recognize that they are public companies and they have a duty and obligation to their shareholders to put out timely information on the material changes in the company. This is a material change.

So if you bought Google in the past couple weeks, I’m just leading you know, don’t be po’d with your broker. He did nothing wrong. I’d be po’d at Google. Unfortunately, somebody will have a class action lawsuit. Nothing will come of it because there really isn’t any legal responsibility for Google to pre-announce.

I just think it’s the right thing to do.

Anyway, that did affect things in a decent way today.

I will tell you that at the end of the day, the Dow was only down 8. I have been telling that there’s been a stark change in that the Commodities area have got a bid while the growth areas are not only dormant, but sort of getting in trouble. I’m been telling that foreign markets have the better bid than our markets.

I’m letting you know that today, with the Dow down 8, I would thought the Dow was down 100. Just remember the Dow is 30 stocks consistent of multinational, low Beta, industrial types. And right now the markets buying up those types…while, growth for the last few weeks, for the most part are being ignored.

You know where I made most of my money the past few weeks? Housing, Gold, Silver, and Financials.

Now what this means going forward, I’m not sure. I just never want to see the Dow down 8 and the Nasdaq down 31 like it was today. I don’t want to see too much of that.

I don’t want to see low Beta leading and growth lagging.

So it’s something we’re going to watch closely. 

LISTEN TO GARY LIVE ON WEEKDAYS 6-7 PM ON A STATION NEAR YOU AND AT GARYK.COM

6-7 pm EST

Best of Investor’s Edge
Saturdays 1-2 am EST

Gary Kaltbaum owns Kaltbaum Capital Management, LLC (“KCM”), an investment adviser registered with the U.S. Securities and Exchange Commission. The opinions expressed herein are those of Mr. Kaltbaum and may not reflect those of KCM. The information offered in this publication is general information that does not take into account the individual circumstances, financial situation or individual needs of an investor. The information herein has been obtained from sources believed to be reliable, but we cannot assure its accuracy or completeness. Neither the information nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Any reference to past performance is not to be implied or construed as a guarantee of future results.