Here’s a head-scratcher. Google announced on Monday that it was changing its name to Alphabet and redoing its organization chart. Seriously, Alphabet? Yup, Larry Page, the company’s CEO said they chose Alphabet because “it means a collection of letters that represent language, one of humanity’s most important innovations.” Mr. Trump might say that name is weak and stupid—I’d say it’s a bit corny too.
Alphabet will be the holding company for all of old Google’s businesses. The Google name will now be used for Google’s main business lines (you know the only ones that make money like Search and YouTube). The company’s other half-baked money losing ventures will become their own business units under the Alphabet umbrella.
You would think such a mundane announcement wouldn’t be market moving news. All Google Alphabet did was change its name and rearrange the organization chart. The company still owns the same businesses and generates the same amount of revenue and earnings as it did three days ago.
How did Alphabet shares react to the announcement? They rocketed higher by 4%, adding a cool $18 billion to the company’s market value on a day when the Dow tanked.
Welcome to the speculative blow-off phase of the market, where common investing sense and a long-term focus earn you no points and no money. If you’re making lots of money in this market, I have only two questions for you 1) when did you change your name? and 2) what are you doing wrong?
Jeremy Jones, CFA
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