It isn't an easy decision by any means, but when people are paying you to make investment decisions for them, you have to step up and figure things out.

Peridot has had a decent sized long position in Google for many months now. What makes the decision even more complicated today is that I decided to put on a trade yesterday to play the GOOG earnings release. I bought the Dec 300 Puts and the Dec 320 calls, with the stock at $308. The logic was that GOOG would probably move drastically after the Q3 report, but the direction of such a move was hardly assured. Fortunately, we did get a huge move after the blow-out report that has some analysts pegging the company's 12-month price target at $450 per share.

Even with Google shares up $40 today, I'm not selling. Of course, my first instinct was to sell, given that my strategy is to buy when others are selling and sell when others are buying. After all, the only reason Peridot is long GOOG now is because the crowd was selling immensely when the company's IPO lock-up period expired early this year, presenting an opportunity for those who prefer go against the consensus view.

My rationale for not selling today isn't very complicated. Yesterday the company was trading at 41x next year's estimates, a level investors were willing to pay based on an assumption of how fast they thought Google could grow. Today we know that the company is growing at an even faster rate than we figured just 24 hours ago. However, now the stock trades at 40x 2006 earnings.

Google's growth rate has gone up, and the stock's valuation has gone down. In this particular case, I can't justify selling the stock, despite today's $40 gain.