In addition to buying Berkshire Hathaway on Friday I also bought some shares of Google (GOOG) and the NASDAQ 100 (QQQQ).
Google stock has come down over 55% from a high of $747 a share earlier this year amid concerns that a slowing economy.recession will mean that companies will spend less advertising dollars online and as a result, Google’s runaway growth rate will slow. These are valid concerns. The economy is slowing and Google will be impacted.
But I believe that during this economic slowdown that Google will continue to grow its market share, making it even more dominant in 12-10 months than it is now. It’s biggest competitors are Yahoo, whose stock is in freefall because of inept leadership and Microsoft who continue to lose market share to Google because their search engine is terrible.
Google Stock Price
So Google’s stock was attractive to me at these levels, but I also think that the stock could head lower if the economic situation worsens. So I continued my strategy of buying at different price ponts by buying 3 shares of Google at $312.08 on Friday.
Similar to Berkshire I had placed a GTC order at $320, but with the market sell-off at the open on Friday I was able to pick up the stock $8 cheaper than I expected.
That purchase accounts for about 7% of the portfolio. If Google drops into the $250-$275 range I will definitely add to my position, but by adding some stock here I am buying a stock that I think will be significantly higher in 3 years. Google closed Friday at $332, so I have covered my commission costs!
The second purchase I made on Friday was to pick up 50 shares of the NASDAQ 100 trust shares (QQQQ). For those of you not familiar with QQQQ it is an investment trust designed to correspond generally to the performance, before fees and expenses, of the NASDAQ-100 index. The fund holds all the stocks in the NASDAQ-100 index, which consists of the largest non-financial securities listed on the NASDAQ Stock Market. The fund issues and redeems shares of NASDAQ-100 Index Tracking Stock in multiples of 50,000 in exchange for the stocks in the NASDAQ-100 and cash.
So basically it its like a mutual fund, expect that it trades as a stock. That means that you do not have to wait until the market closes before you can buy and sell the stock, which is a big advantage in today’s volatile market.
NASDAQ 100 Stock Chart
Last month I bought the Vanguard S&P 500 index fund which is a broad based fund, and I wanted something that has a little more upward potential which is why I like QQQQ. I am not sure that the market will not go lower in the next week or so, but I will never be able to pick the bottom in the market. I think that this is a good entry point to buy some NASDAQ stocks and by buying 50 shares I am taking a position and also saving cash in case the market does move lower.
So to recap, I started with $13,000. So far I have bought the Vanguard S&P 500 index fund ($3,000), Berkshire Hathaway ($3,000), Google ($1,000) and the NASDAQ (2,000). I still have $4,000 left in cash that I can use to purchase some more stocks if the market sells off in the next week or so as I expect it to do.
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