Remember when hiring was considered a sign of strength?
Google recently announced they would use just a portion of their mountain of cash to expand, and investors immediately bid down the stock.
So my "Call-to-Action" today may seem a bit counter-intuitive: beware of companies on a hiring spree.
To me, using cash to hire and expand business is a positive action, but for whatever reason, the move is being frowned upon by investors. And as the saying goes, the market is always right, even if you personally disagree with it.
Perhaps, in these times of uncertainty, investors want to see management deploy that capital in ways the expand the bottom-line. Maybe they prefer to have some of that cash returned to them in a form of a dividend.
Either way, I maintain that using cash to expand the business through new waves of hiring is a sign of not only current health, but also better things to come.
But as of now, that view puts me in the minority, and you can't fight the tape. Sometimes, a contrary reaction in one stock's case—Google—is a gift in preventing a future mistake.
I would normally say follow the leaders who can afford new personnel, but the market does not like this move right now. And you can't fight the tape.
Programming note: "The Strategy Session," hosted by David Faber and Gary Kaminsky, airs weekdays at Noon ET on CNBC.
Gary Kaminsky does not hold any equity positions.
The content of this blog is published in the United States of America and persons who access it agree to do so in accordance with applicable U.S. law.
All opinions expressed in this blog are solely the opinions of Gary Kaminsky and do not reflect the opinions of CNBC, NBC UNIVERSAL or their parent company or affiliates, and may have been previously disseminated on television, radio, internet or another medium. You should not treat any opinion expressed by Mr. Kaminsky as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. Mr. Kaminsky’s opinions are based upon information he considers reliable, but neither CNBC nor its affiliates and/or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. Mr. Kaminsky, CNBC, its affiliates and/or subsidiaries are not under any obligation to update or correct any information provided on this website. Mr. Kaminsky’s statements and opinions are subject to change without notice. No part of Mr. Kaminsky’s compensation from CNBC is related to the specific opinions he expresses.
Past performance is not indicative of future results. Neither Mr. Kaminsky nor CNBC guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment discussed on this website or on the show. Strategies or investments discussed may fluctuate in price or value. Investors may get back less than invested. Investments or strategies mentioned on this website or on the show may not be suitable for you. This material does not take into account your particular investment objectives, financial situation or needs and is not intended as recommendations appropriate for you. You must make an independent decision regarding investments or strategies mentioned on this website or on the show. Before acting on information on this website or on the show, you should consider whether it is suitable for your particular circumstances and strongly consider seeking advice from your own financial or investment adviser.