Monday, September 8, 2008

More Google.

Bought a little bit more Google (GOOG) today. This is a repeat of this year's bottom in March. I don't know what is the reason for this vicious sell off, might be just hedge funds margin calls. Yes, tech is going to get hurt by stronger dollar, but it can't explain almost 20% drop in a month. And not all tech is going down. So I added a small number of shares to my position.

Nationalization of Fanny and Freddy has a lot of consequences, most of which are not clear at all. The deal itself is not clear. It might be bearish for a dollar, but dollar is up big today. I think it's up because foreign investors feel more comfortable investing in US, when huge indebted corporations are saved by government. There is also indirect evidence that dollars are needed to pay off debts which are part of dollar carry trade which was going on since November 2007. At least I know that in Russia about 100 billion dollars of loans taken by government supported companies are due in the nearest 12 months. It's not much, but Russian companies are not the only ones which used dollar carry trade. They are up for a big hit, because of currency move, but it's carry trade risk which they should've taken into account.

My idea that Russia is sell short was right. I chickened, again. OK, they say that profit not made is better than loss taken. Honestly, I don't see much difference.

Full disclosure: at the time of publication author had a long position in Google. Positions can change any time.

Disclaimer: This article is not intended as an investment advice. Every person should make her/his own investment decisions based on all available information and advice from her/his own financial advisor.

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