Annual Checkup -- GOOG

Google (GOOG -- free RT quote), a little internet company that you might have heard of, has grown so fast this year that it now dominates my portfolio. After returns of about 120% to this point it now makes up close to 15% of my individual stock holdings. So, is it time to lighten up? Recent news included the AOL deal, which I liked, and some upgrades -- Piper gave GOOG a $600 price target yesterday, and Bear Stearns a $550 target today. If Piper is right, Google will be a $175 Billion company at this time next year -- and while that's hard to imagine, it was probably harder to imagine that it would hit $100 Billion within a year of going public. I have to keep reminding myself that I thought I might be overpaying at $180 or so when I first started opening my Google position -- after all, it had already doubled in six months. I have recently been resisting the temptation to shave a little bit off of my Google holdings since I think the company still has a brilliant future ... but if this accelerating stock price continues I'll have to reconsider whether any future can be as brilliant as the valuation would portend. Not too nervous today, since the forward PE is only about 50 and that, crazy as it seems, is reasonable for their market position and growth rate, but at some point the growth will plateau -- whether that's next year or in ten years is very hard to guess right now, at least for me. I think I'll take the opportunity of hitting the one-year holding period in February and March to consider lightening up, but I don't see a reason to pay short term taxes on this gain right now, and am willing to take the chance that their next quarter might disappoint -- long odds on that if you consider their history. But while I love the company, I definitely couldn't stomach adding any more at this point -- I'm too afraid of gravity. What this means for the psychology of this individual investor will have to wait for another day, but it's certainly interesting to me that I was willing to buy ISRG after it had tripled in a year but wouldn't do the same for GOOG. Hmmm.

Oh, and P.S.: GOOG is again at a 52 week high this morning. Remember when $450 seemed like a crazy price target, oh, about three months ago?

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