Best of luck in 2007!

I agree with everything you say, although this tenet stands out:

“My logic was … that many of the positive surprises surrounding Google’s search business had already been reflected in the stock. To diversify, the company began spending lots of money hiring people, investing in new services, as well as overseas expansion. To me, the easy money had been made and there was less certainty that the company’s other ventures would be as successful.”

I agree with you, as we each (and probably all investors) acknowledge Google‘s explosively increasing SGA expenses. Ultimately, these increases will effect margins and finally the more obvious bottom line. Of course, when one considers what they do with the money… well, the firm might no longer be characterized as “search giant”!

Thank you for the link to your site; I aim to study diligently your musings.

Best wishes,
David