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Google mission is to bring all the worlds information to its customers, Baidu stock price will only rise as high as the Chinese government lets it bring the worlds information to the Chinese people.

Posted by Mike Reardon at August 6, 2005 1:50 AM

There are a number of factors at play when it comes to the rise and fall of stock prices on any given trading day. Investors who are able to grasp what these factors are will be more likely to achieve success when buying and selling stocks in either a bull market or a bear market.

Stock market indicators are extremely important in the process of determining the viability of purchasing stocks of a particular company.

Investor able to understand what the indicators are saying about a particular firm's stock value or growth prospects will be able to make solid decisions sure to bring in profits over the long term. According to the dictionary, a stock market indicator refers to anything used to project future financial or economic trends.

There are a myriad of indicators that an investor can use to help gauge the market and determine an optimal portfolio. Sentiment indicators are the group of stock market indicators that include how investors are “feeling” about the market.

Stock prices are determined in the marketplace, where seller supply meets buyer demand. There is no clean equation that tells us exactly how a stock price will behave, but we do know a few things about the forces that move a stock up or down. These forces fall into three categories: fundamental factors, technical factors, and market sentiment.

a) Fundamental Factors
In an efficient market, stock prices would be determined primarily by fundamentals, which, at the basic level, refer to a combination of two things: 1) An earnings base (EPS, for example) and 2) a valuation multiple (a P/E ratio, for example).

b) Technical Factors
Things would be easier if only fundamental factors set stock prices! Technical factors are the mix of external conditions that alters the supply of and demand for a company's stock. Some of these indirectly affect fundamentals. (For example, economic growth indirectly contributes to earnings growth.) Technical factors include inflation, economic strength of market & peers, substitutes, incidental transactions, demographics, trends, liquidity etc..

c) Market Sentiment
Market sentiment refers to the psychology of market participants, individually and collectively. This is perhaps the most vexing category because we know it matters critically, but we are only beginning to understand it. Market sentiment is often subjective, biased, and obstinate. For example, you can make a solid judgment about a stock's future growth prospects, and the future may even confirm your projections, but in the meantime the market may myopically dwell on a single piece of news that keeps the stock artificially high or low. And you can sometimes wait a long time in the hopes that other investors will notice the fundamentals.

Posted by K.Sriram (from India) at August 6, 2005 1:57 AM

Mike, excellent point! Cultural/Political restrictions will certainly limit the capacity for growth of a Chinese Search Engine. But, because the predominant users of this tool will be within that restricted culture, and accustomed to living with restrictions of content; they will probably still use the tool. The market is quite large. And, perhaps it will prove attractive to world users to have a search engine that won't include extraneous "hot babe" results when looking for "hot sauce market leaders"?

Posted by Tom O'Leary at August 6, 2005 6:02 AM

I worked on the Emerging Markets desk at a major Wall Street investment bank and saw many Eastern European and South American companies come to the US market when those areas were hot. Most of them had absolutely no fundamentals to speak of. Some didn't even have financial accounts. They had hype, tons of it, and the story really fired the imagination of the market, but they were dubious at best; Gazprom, the Russian Utilities firm being a high profile example.

I don't think a Chinese search engine coming to market signals another dotcom-like era. It's just another hot concept that in this case combines technology with that age-old Western dream of gaining access to a couple of billion people to sell them something, whether it's goods or religion. Western businesspeople and missionaries have been seduced by this dream for centuries, but it's never been realized and in my view never will. The Chinese will smile and take our money but China will remain China, run by the Chinese.

And they won't only restrict the porn. Anything they don't like, especially political dissent, will never make it to the screens of those using their search engine. Aside from making money, their aim is to increase their control over the information and content that is made available to their people and they're seeking foreigner's money to do it. Even Google has invested. All that know-how for free. In fact, they're paying to provide it - a simultaneous picking of pockets and picking of brains!

Posted by Noel Guinane at August 7, 2005 4:11 AM

Today Baidu.com stock ended at $91.75, down from $153. The next test is how much ROI can be gained by businesses, from commercials in the Chinese market. China is the place that customer meet to exchange their Ebay purchases, can Googles brand marketing, that is not touched in person work in China. And do three-hundred million clicks mean, a real return in cash for products.

Posted by Mike Reardon at August 10, 2005 5:26 PM