This is the Time to Buy Google Stock

As a believer of the random walk theory in the stock market, I generally don’t pick individual stocks for investment.

As such, I do not recommend individual stocks, since I generally know as much about individual stocks as the auntie downstairs who keeps all of her savings as cash in a shoebox.

However, if I were a stock picker, I sure would be tempted to buy Google stock now.

Yes, I know that Google stock is plummeting daily, after an initial drop last week due to unspectacular 2Q results. Yes, I know that the price has reached under $500 per share ($467 as of this morning) for the first time since like forever (actually April). And yes, I’m aware that many folks are weary that the recession has finally caught up to the online advertising industry.

Bob Warfield claims that Google’s Google Anti-Gravity Ray is Fading. The Wall Street Journal thinks that Google’s heydays are over.

And yet I still think the stock will definitely recover with a fury. Three reasons why:

1. This was by no means a poor quarter by Google. Profits were up by 35 frickin’ percent. So they missed analyst expectations, but objectively speaking, this was still a healthy quarter, in terms of both revenue and profit growth.
2. People seriously underestimate Google’s ability to recover from stock dips. Remember as recent as March earlier this year when Google’s stock price was at a low of $412? After a series of announcements starting with the official acquisition of DoubleClick and the launch of the Google App Engine, Google’s stock price promptly recovered to the high $500’s by early May.
3. Deservingly or not, Google still has that mythical aura surrounding it which makes people believe that everything Google touches becomes gold. It’s a perpetual buzz machine which still captures the imagination of millions around the world. I bet all it takes is one major announcement, and the stock price will soar back to the $500-600 range again.

Should I abandon my principles and go ahead to buy Google stock if the price continues to nosedive – say to around the $430-450 range? Hmm… it sure is tempting.

In other news, IBM stock continues to climb. Just sayin’.

Google vs. IBM stock prices from Jan 2007 to present day (Jul 22, 2008)