No trades to be closed today and what is truly surprising to me is the fact that next week, the final week where I will make long and short picks in 2012, might be my first opportunity to have 7 live trades (my limit). Trades have been closed rather quickly so far this year which contrary to the previous 2, has not turned out to be a great thing. I’m hopeful that I’ll be able to turn things around, including my today’s new trade:
Let’s get right to it and look at the numbers:
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Long Google (GOOG)
I’ve been a big fan of Google for some time now and after making the case for being a long term GOOG bull, I am now also ready to take a shorter term position on the stock as I think Larry Page has been doing an outstanding job of taking Google back to its old culture. Is it there already? No, and it might never get there. But it is taking bold steps once again, and growth seems to be following the company which will mean good things for the search giant. Google has been very aggressive in mobile, local, social, etc. The big negative has been diminished margins & profitability but that was to be expected for the first few years of a Larry Page regime.
Short Microsoft (MSFT)
It wasn’t easy for me to finally decide to short Microsoft. It’s a company that I believe in and one that might be making a significant comeback. That being said, even with its recent announcement of Office 13, I still think Microsoft has a lot to lose in this new era of cloud based software where it will likely face more competition. However, I wanted to face Google with a large, stable company that was priced at a similar P/E and I do think that while Microsoft is doing a lot of things right, competing with Google is a whole other ball game. The stock has been very stable in the past few years and I expect more of the same in the near future, especially if it remains so conservative with its cash.
Disclosure: No positions on Google (GOOG) or Microsoft (MSFT), this trade will be opened on Monday morning