I Love Google, but Emotion Has No Place in Your Portfolio

NEW YORK (TheStreet) -- For all its faults, Wall Street has honesty you can't find anywhere else. It's what I love about the markets and why I believe the free market works so well to raise the standard of living for all those that embrace it or are surrounded by it.

There is simply no better pricing mechanism than today's exchanges, and in the age of social media and crowd sourcing we can easily forget that the New York Stock Exchange was the original crowd-funding portal and later Nasdaq joined in long before people even dreamed of searching Google ( GOOG) for ways to raise capital for various endeavors.

With that said, It's fitting BlackBerry ( BBRY) is trading near multi-year lows while Google continues to break record highs with almost every new word I type. It's the difference between a company that refuses to stop innovating and a company that either refused to forge ahead or didn't know how.

Google reported revenue of $14.9 billion, slightly above the analyst's estimates of $14.8 billion, and non-GAAP earnings per share was also slightly above estimates coming in at $10.74. Analysts rushed to raise their price targets after the report, and the median price is now above $1000 a share.

I will caution investors to consider taking some money off the table. There's no question Google has a superb search engine, -- I use it exclusively. However, the real competitive advantage Google enjoys over Microsoft's ( MSFT) Bing and Yahoo! ( YHOO) is so simple that it's only a matter of time before the playing field is equalized.

Google's revenue driver is its advertising network. It's right there in front of everyone, including the executives at Yahoo! and Microsoft. While it may have taken Bing and Yahoo! years to notice the sun rising every day, they have noticed and they are now making it as easy to buy ads as Google has for a long time.

Offering the ability for Web sites to monetize revenue has eluded Bing and Yahoo!, giving Google a monstrous advantage to build relationships with. I believe that's about to change because Yahoo!'s relatively new (just over one year on the job) CEO Marissa Mayer has already proven she is smart and is consumed with aggressively reshaping Yahoo! through acquisitions.

Mayer also comes from Google, so she understands from the inside why Google is able to extract mountains of cash from advertising that it produces quarter after quarter. Does that mean I think Google is in trouble and investors should be worried? No, not at all. But it does mean I think most of the low-hanging fruit have already been picked. Google will have to fight harder for each incremental percentage change in revenue and profit than the previous one.

Taking profits off the table doesn't necessarily mean having to sell your shares. An investor can sell call options against some of the holdings to hedge some risk while generating income.

For example, an investor with a cost basis of $500 may not want to sell because of tax considerations. An alternative is to sell the December $1020 strike call option for about $14.25. Based on a highly fluid price of $980, this allows for another $54.25 in gains per share while reducing risk by over 1%.

For investors wondering how to position a $1,000 stock, a conservative strategy may make a lot of sense.

At the time of publication the author was short BlackBerry covered calls.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

Robert Weinstein is an active trader focusing on the psychological importance of risk mitigation, emotion and financial behavior of market participants. Robert co-founded the investing blog StockSaints, where he writes a journal about his trading activity and experiences.

In addition to TheStreet, Robert also contributes to Real Money Pro, providing real-time trading ideas for stocks, options and futures.

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