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If Google is such a great investment then why not invest in Yahoo? Yahoo has better earnings and P/E ratio and at a much lower price than Google.

Google Stock

Market Cap: 80.82B
Revenue (ttm): 3.79B
Net Income (ttm): 704.34M
P/E (ttm): 115.00
PEG (5 yr expected): 1.81
P/S (ttm): 20.52
Price per share: $290.94

Yahoo Stock

Market Cap: 53.79B
Revenue (ttm): 3.99B
Net Income (ttm): 942.90M
P/E (ttm): 59.91
PEG (5 yr expected): 2.22
P/S (ttm): 13.27
Price per share: $38.52

"If Google is such a great investment then why not invest in Yahoo? Yahoo has better earnings and P/E ratio and at a much lower price than Google."

Because Yahoo isn't "cool" anymore (that's the short answer). Yahoo is so 1999.

Price to Sales of over 20! Wow. That means if Google turned every penny of sales into profit, it would take you over 20 years to get your initial investment back. That assumes no growth, but is Google really going to grow enough to recoup your investment? Where is that growth going to come from? Investing in stocks like this shows the "greater fool" theory - you hope someone comes along who is willling to overpay for a business more than you.

Unlike EBay, Google does not have a lock on the market. It is conceivable that someone can come along who does what they do better, and then they're gone like that. Google did it to AltaVista and Lycos, so it can be done to Google.

But there's a problem with shorting a stock like this. You might be sure it's overvalued, but you can lose your shirt waiting for it to go down. Who knows where it will peak?