Google Puts and Soap Slivers (Really)

Google is just the most wonderful company that ever was.

Whether it is worth $53 billion is the question of the day, but first let me give you just the latest example of what it does for my life.

Soap slivers.

For some time now, I have been working my way through a bar of some kind of soap I can’t identify, it’s logo having long since washed away . . . thinking good thoughts – I like this soap, whatever it is – yet hoping for its demise. Once a satisfying handful, this bar of soap has become, as they all do, a sharp-edged sliver, best suited for greasing skids (but I have no skids).

I want this soap gone.

Not least so I can engage the enticing new bar, filched from a four-star hotel, on deck in the soap bull pen.

But what to do? When is one morally justified in killing a bar of soap?

(I’d like to say here that with toothpaste I face no such dilemma. I squeeze every last iota from each tube and still get three or four brushfulls before I toss it.)

My first thought was to ask you for help. Amongst my estimable readership (yes, you) there resides a collective expertise of astonishing breadth, depth, and good will.

But then I realized I didn’t have to trouble you – I could maybe just Google it.

And this is as it should be, of course, because you don’t come to this site looking for questions; you come, at least in part, I hope, looking for answers.

I managed to hold this thought in my increasingly challenged brain long enough to get from the sink to the tool bar on my browser. (I assume you have placed Google on your toolbar. If not, click here. You will be so pleased you did. Not least because it can ‘autofill’ in your name and address and e-mail and such almost anywhere they’re called for.)

1. I typed SOAP SLIVERS.

2. An instant later, I was an expert.

To wit:

A participant named Otter, on the Guiding Light Christian Forum:

Recently we took about a year’s worth of soap slivers that have been saved up and put them into a plastic tub and added water. We used a potato masher and stirred really well. (A mixer if you have one would be even better.) When you get the soap and water to the consistency of Soft Soap you can add it to an old bottle (we used an old bottle that shampoo came in that had a pump dispenser) and now we have this huge bottle of hand soap for the bathroom. With the soap slivers we had we made enough soap to fill that bottle two or three more times. It’s a perfect way to use all of your bar soap and save money on buying those expensive liquid hand soaps.

I have begun my own soap sliver jar. And relieving friends of their soap slivers when I visit. I can’t wait for the day I make soap soup.

If you don’t like that idea – and have $3 – you can buy one of these soap sliver hand cloths.

Or you can graft the old sliver onto its replacement:

The purpose of this soap splicing [writes Raymond Weisling] is twofold. One is that it affords some respect for the pith of the piece that once was much greater. If the outer part provided good service, the inner part should be no different. And secondly, why discard something that is still useful? Nobody will get rich by being thrifty with their soap bars, but it is a starting point toward a greater awareness of thrift in everything we do. If the average soap bar lasts for three to five weeks per person, I figure that about 50 billion bars of soap are produced every year. If 5% of each are discarded it amounts to a quarter million tons of soap going to waste every year.

I don’t know who this guy is, but I love him. (You can read his entire essay here. But in a soapnut shell: ‘If a little sliver of soap takes a short bath in warm water it can often become supple enough to conform to the contours of its big brother, the new bar that just arrived. With a little gentle pressure these two will cling together, at first not very tenaciously, but as the relationship develops and each one absorbs something from the slippery, soppy bond, they might well become one until the lesser of the two fades away totally.’)

Or you could find this guy and invest in his proposed electric Soap Reanimator.

That venture should have a market cap of, oh, say, zero. But what about Google? Is it cheap here at $53 billion? Dear?

Last October I admitted to buying Google puts.

‘Google rules,’ I wrote. ‘Google wins! I could not live without it. It has made my life better and our world more productive . . . But what is it worth?’

It came public August 19 at $85 a share and jumped by the end of the day to $100 (which was a truer reflection of supply and demand, because Google had purposely picked a price at which only 74% of the orders were fulfilled, leaving demand for more and the likelihood of a nice first-day bounce). It closed trading Friday at $144, giving the entire enterprise a valuation of $39 billion.

What has happened to make the company 44% more valuable than it was at the close of trading 60 days earlier? It’s not as if this was a little-noticed public offering people are only now discovering. I don’t think any public offering has ever attracted more attention.

Whatever Google is worth, there might be some employees and insiders wanting to sell shares to buy a Porsche or a house or a plane. According to Yahoo, 38.5 million shares will be freed from lockup 90 days from the day of the offering – November 19, by my rough calculation – and another 177 million shares 90 days after that (February 19 or so) . . . with some more in between . . . which is why, not meaning to be a Googapuss, and perfectly prepared to lose my entire bet, which one so often does when one speculates with options, I bought some March 155 Google puts Friday afternoon.

Well, it’s a good thing I was ‘perfectly prepared to lose my entire bet,’ because the stock today is around $195, which makes the right to sell it at $155 worth no more than an electric soap reanimator. (If I had the right to sell shares at $255, that would be good – I could buy them for $195 and ‘put’ them to some poor fool at $255 – ‘let it put it to you this way’ – and laugh all the way to the bank, with a quick detour over to the IRS to share some of my winnings.)

The game’s not over yet, to be sure, and some of us compounded our problem by buying more puts at 185 . . . some of those might work out by the third Friday in March. (Options always expire the third Friday of their expiration month. It’s like Thanksgiving, only a week early and a day late and every month of the year and you don’t get to take the day off. I digress.)

But it’s not looking terribly good.

And I have to tell you – this is not fake good sportsmanship, this is what I really mean – I really don’t mind losing money on this one, if that’s what happens. (I feel terrible if you lose money on it, but that’s a different story.) Look what Google’s done! Their latest effort is to scan essentially every book ever written, 15 million of them, for instant free search and viewing on the net. How cool is that?

A very smart, wealthy friend who shorted the stock, writes: ‘They hated it at 115 and 135. Using >Google makes my life better. Shorting Google makes my life miserable. I don’t think this is the top and I don’t think I can hold on much longer.’

What he means by ‘they hated the stock at 135’ is that this is where Google had first hoped to sell shares to the public, but not enough people wanted to buy. Nor would they buy at 115. So if they didn’t want it at 115 a few months ago, why do they clamor for it at 195 today?

And the higher it goes, the more he stands to lose. (Unlike buying puts, where you can only lose what you bet, shorting a stock gives you the potential for unlimited loss.)

Let’s say he shorted 1,000 shares at $130 and then, not believing his good fortune at the number of fools in the world willing to buy shares from him at this crazy price, shorted another 1,000 shares at 140 and then 1,000 more at 150. But then he got too nervous to short more (that’s what happens) and so now he watches as he loses $3,000 for each point Google gains. Should the stock leap to 400 in a matter of weeks – the way Amazon did a few years back – he’d be out a further $612,000 from here.

Some very smart people wind up covering at the top – they are the ones buying at 400, they who know better than anyone that 400 is a ridiculous overvaluation – and this story has been replayed over and over throughout financial history.

So the fact that my friend thinks this is not yet the top and may cover his short (however large or small it actually is) could mean that it is the top . . . and, thus, a good time to buy puts.

But the fact that he has not yet covered and taken his loss could mean there’s more pain (for him) to come.

My own thought is that the high may have been $203.64 this past Monday, January 3. That was the day after ’60 Minutes’ did 40 minutes (less commercials and Andy Rooney) on Google. That’s the sort of event that typically draws in inexperienced buyers at the same time as it signals the smart money that it’s time to get out.

But who knows? Who knows how large and profitable the company might grow in a few years? Who knows whether little outfits like Microsoft and Yahoo might someday find a way to compete?

I somehow think it’s more likely Google will be worth ‘only’ $10 billion someday (losing four-fifths its value) than $210 billion (a four-fold gain). But if I’ve proved anything since October, it is that I don’t know where GOOG is going.

So I sit with my puts expecting to lose . . . but cheering Google on.

I’d say something about ‘washing my hands of it,’ to circle back to the soap slivers, but actually the more Google in my life, the happier I am.