The entry of Icarus-candidate Google into Standard & Poor's 500 Index of US stocks did little for the credibility either of the search engine or the stock market system.
Announced Friday, Google's inclusion in the S&P index (effective March 31) triggered a leap of 7% in its stock value - despite the fact that the company's shares have fallen more than 25% since their high of $475.11 three months ago.
As a measure of the market's hysteria over the Google syndrome, onlookers cite last month's iteration of the blindingly obvious by Google cfo George Reyes - that the company would have to find new ways to sustain its meteoric revenue growth. This simple statement of fact triggered a mini-panic and stock sell-off among investors.
Then, presto! Reyes' warning was immediate consigned to the trashcan of history by the euphoria surrounding the S&P announcement. But Google's elevation to the index is a largely decorative accolade.
The S&P 500 is a market-weighted index of what (in Standard & Poor's opinion) is a representative sample of the largest US companies. The sole value it adds to Google is its effect on the herd mentality of fund managers and other dealers whose strategies are geared to tracking the benchmark index.
Despite their recent travails, Google's shares ended $23.91 higher at $365.80 on Friday - 4.3 times their debut value in 2004.
Data sourced from Financial Times Online; additional content by WARC staff