Sunday, October 14, 2007

Tau Zero

Google has a problem with round numbers: it gets stuck.

When I first started looking at the stock, it had just poked through 200 and then turned back. The poor fool who paid $201 was mortified. I watched it go back to 180 and bought some. It kept going down to 160 before turning back up. It got stuck at 200 again and dithered for a while longer. There was nothing special about 200. It was just a round number.

Later, it got stuck again at 300. And 400. And 500. At 600, there was only a slight hesitation before it blew through. The law of large numbers was beginning to overtake the round number effect:

200 to 300 is a 50% move; 300 to 400 is a 33% move; 400 to 500 is a 25% move. You get the idea. Now we're moving from 600 to 700 which is a 16 2/3% move, but people are still looking at it as a hundred points. But a hundred points isn't what it used to be.

At Google 3000, you'll move through a hundred points and the only thing you'll notice will be a slight ringing in your ears.

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