Google: Both Sides Now

In 2006, the perception issue will be different, more complex and probably more troublesome. Google is a large company, with nearly $5 billion in annual revenue and a market cap several times larger than brand names like Coca-Cola , Nike and Disney (DIS Quote). Like those companies, Google will make the inevitable move from cute, friendly brand to reviled, conflicted corporation. Power like Google's means thousands of paper-cutlike compromises to maintain your interests.

It's something you can fight but can't win. It's the trajectory charted by Charles Foster Kane and Michael Corleone: If you don't want to get crushed by the system, you have to become the system. The catch for Google is that it set the bar too high for itself early on, vowing -- as you read it now for the millionth time -- to "do no evil."

This is an issue for investors because Google's brand is tangled up in that mantra. The company may never put flashing banner ads on its home page, but it's already set foot on the slippery slope of graphic and video ads, and it's finding it can't make ads more personal without intruding on users' privacy. Both will surely alienate its biggest fans, and create an opportunity for its rivals.

Bearish Case No. 2: Liquidity Factor

Google traders surely have noticed that the stock has grown more volatile since rising above $400. It used to be that buyers would emerge whenever the stock dipped. Now they seem more tentative. The stock was down 4% in the last four days for no good reason, then kicked off the new year with a 5% bounce after a $600 price target was stuck on it by Piper Jaffray.

In 2005, the institutional investors who craved Google for a long-term investment had every chance to sate their appetites on the stock. And they surely got in at a good price -- Google was trading around $295 when its secondary offering went through in September.