Archives: 2004 and 2005
2005 Stocks: Results
More losers than
gainers, but the gainers were very impressive.
If you bought equal shares in each of these stocks, you should be very happy.
Notable Stocks not in the "portfolio"
- Was impressed
with INFY after a visit to India in June.
2005 Success Stories:
Personal experience. I set up my blog on blogger.com in less than an hour. I noticed an ad pitching google ad sense-yes those text ads at the top right of this page. I "applied" online and in a few hours received an approval with a url to go to. I walked through some terms of service pages and filled out a 1099 tax form--all online. That night, i copy and pasted the code to serve the ad words and went to sleep. The next morning, the ads were CONTEXTUAL to my site; biking and fitness-related. It was amazing because i never told Google what my site was about. I later posted a story about raccoons tearing up our lawn in search of these white grubs. Amazing-almost simultaneously, I had ads on my blog pitching white grub insecticide. That's awesome. While I won't be quitting my day job any time soon, Ad Sense has generated a whopping $9.31 in revenue for me :-). You don't actually get paid until you clear fifty bucks, though. While Google has hit a home run by buying blogger.com and by monetizing infinitely targeted content with ad sense, Yahoo deserves credit for making RSS feeds REALLY easy to aggregate via My! Yahoo and Y! 360. If you want to learn more about any of these buzzwords, check out wikipedia, a self-policed/any one can publish encyclopedia of the world as we know it. Another "good" from web 2.0.
The bad: Most overrated web development this year? TAGGING. Good lord; apparently our worlds are SO complex that we think it's helpful to SPEND TIME categorizing web sites, photos, "content" with words that make them easier to find later on. Being a bit cynical here, and if people standardize on what they call things, this could be useful. But I don't see this being realistic without some BODY of people really reinforcing where things should go and why. Yahoo attempted to categorize the web in the early days (the "directory"). Funny how what's old is new again, with del.icio.us being acquired by Yahoo. I think the application-tagging-is probably better realized with flickr, another yahoo acquisition. Flickr uses tags to categorize the reams of photos we all take--now that's useful. With photos, you go through a lot of effort to take the pics, organize by event, and upload them. Adding "tags" is really already part of the process.
Similarly overwhelmingly hyped is Pod casting. Pod casting is publishing content (usually indy artists or garage-based talk shows a la Wayne's World). I'm fine with making mainstream content available on-demand (such as programs on NPR), but the illusion that a huge marketplace for independent music will come of this is naive. There is a reason why big music labels ARE big and why they seem formulaic. It's because that's what the mass market WANTS. There is probably a business model out there in ranking Podcasted content to bubble up the wheat from the chaff. I guess that might be what myspace is.
The ugly: Dorky phrases for 2005.
Another example is a truly integrated and easy to use media center. One console to program your remotes, transfer songs/podcasts from your ipod to your home and car stereo, program and record your Tivo, and send any and all content to your work pc, home pc, home tv, and car stereo. The device that stores and controls all of this content will likely be the next generation iPod. It will have to have plenty of storage and very secure data-protection.
Web search should also have a big change this year (if it doesn't, it needs it). There is something horribly primitive about merely "text based matching". There has to be a better way to gauge CONTEXT and bubble that up.
Cell Phones. I hate
the preoccupation with cell phones. I honestly
think that people aren't really that much busier than say 10 years ago. They
like to THINK they are. It boggles the mind to see people instantly on their
cell phone as soon as they break away from a meeting. Recently saw a young
couple eating at a restaurant. HE was on his silly cell so SHE decided to get on
as well. Neither was talking, I guess each was "checking messages". From who?
Yes, cell phones are a great convenience and can help fill idle time, but the
addiction is just so unnecessary.
DUBS aka huge
wheels and low profile tires.
Music. Maybe it's just old age, but in my opinion, modern music is just crap. 50 cent? Kanye West? Jessica Simpson? Gross. Coldplay and Green Day are ok, and Sheryl Crow is this generation's version of the Eagles, but talk about mediocre overall.
The in competency of the president-and that no
one is doing anything about it. I don't think there has been a president
that has been more ridiculed in US history for being an idiot. It's so ironic-he has the
state of the art staff and he governs on an agenda of world
leadership that has been the US mainstay for centuries. But the
administration seems to get caught up with releasing too much
information at the wrong times. I believe most Americans secretly
(or openly) acknowledge that US policies are not inherently fair, and are driven by
our needs to continue to grow and support our standard of living. But
the "freedom of information act" or whatever you call it, and
the unquenchable thirst for sensationalism of the media has brought
more scrutiny to this president's regime. And they are failing under the
Recycling and Global Warming. Have you ever put a small amount of dirt in a pool of water--ever kicked out the mud in your boots in a puddle? It's amazing how cloudy and murky the water turns, isn't it? Yet we release countless amounts of pollution every second of every day. Littering should be a felony. Global Warming is, unfortunately, now an extremist term that is too large to comprehend. But it's more glamorous than simply saying we need to clean up our waste. Waste and pollution are a crisis that need to be dealt with as our most important priority.
Higher standard of living. In the US, it's amazing how there is a continuously higher standard of living, though I don't know how it's being financed (must be on debt). It is admirable that stores such as Wal-Mart, Target, Starbucks and Whole Foods, as well as devices such as the iPod and cars like the Prius, and services like cellular coverage, DSL and Cable, are making lives for ordinary Americans better. Though "better" is now defined as materialism versus personal satisfaction through hard work and a higher meaning.
Real Estate. It's sick and wrong that an acceptable 3br/2ba house in the Bay Area now fetches ONE MILLION DOLLARS. This is no exaggeration. The median price soared 20% in 2005. This is on top of already inflated years since 1999. Ironically, there are two kinds of loans that are gaining popularity; short term-interest only, and FORTY year fixed. The scary thing is, even if there is a huge correction, home prices will still be overpriced and, in reality, not affordable.
Cars and oil. The state
of the US auto industry is deplorable. For 35 years, we've known about
dependence on foreign oil, it's scarcity, and it's harm to the environment. But
in realistic terms, we've moved at a snail's pace. Compare this to World War 2;
aircraft in 1938 were pressed to exceed 300 mph. By 1945, jet engines were
invented and 500 mph was possible. Let's say average miles per gallon in 1970
was 13 and in 2005, 20. This is a 54% improvement in 35 years versus 67% in 7.
Like WWII, we are in a WAR, a war against reliance on scarce fossil fuels.
Hybrid vehicles are a good step, but the dangers of disposing of batteries are
Ford made a small effort with the Escape, but they need to launch more high-efficiency models. GM was premature and needs to catch up quick. Meanwhile, Toyota and Honda are kicking American car company ass.
Howard Stern and Sirius; the end of Monday Night football available to
everyone, TV available on Apple or Yahoo!.
Gambling. The recent glorification of Las Vegas, the popularity of Poker as seen on ESPN, and the proliferation of Online Gaming sites embodies the revelation of another sin made available to the masses. There is NOTHING GOOD that can come of this, except to shareholders/owners of these companies. This is an unfortunate new emergence that capitalizes on the day-trading craze of the dot-com bust, with "everyman" able to bet.
2006 Predictions: Stocks
Focus on Automotive
The automotive industry is in a fundamental change due to the need for alternative energy sources, old-fashioned employment policies of Ford and GM, and massive growth in India and China. GM and Ford have been slow to respond to changing times while Toyota has lept forward.
Predictions: Honda is a safe growth bet with the stock barely changed in 2005 and with an influx of hybrid cars and penetration in Asia. Ford's price is so low--but they are still profitable. Ford is high risk, but could double if they comprehensively roll out their hybrid technology (from the Escape); alternatively, they could be a (gulp) takeover target with their luxury brands (Volvo, Jaguar) and popular main-stream adobption. Toyota will become the world's largest automotive manufacturer-not in 2006, but in 2007.
|Ranked by Sales||Symbol||12/30/2005||Mkt Cap||P/E|
|Daimlerchrysler AG||DCX||$ 51.03||51.83B||18.92|
Yahoo will have reliable growth and may come out with some surprising innovations, potentially game-changing.
Cisco is the sleeping giant. Expect a big move in 2006.
Google. The genius of this company is that they actually have only one primary product; Search. This means they can do fewer things, better. Search is the killer app and they are finding more and more ways to vertically target it's users and then monetize with Ad Sense/Ad Words. Because these verticals are more targeted, pricing for the ads increases. Plus there have been many indications that they will roll out graphic advertising, opening the way to big branding spend.
Walmart. This is the money making machine. Stock was flat in '05. Expect some lift in 2006.
Infosys. 2nd largest Indian tech company. Recently won the tech contract for the new Airbus super-luxury liner, larger than the 747. Have grown 17% in '05, but there is probably still headroom.
Motorola. Their PowerPC chip is the heart of the new Xbox 360, and they have been launching some knock out phones. Underpriced right now.
Apple. Their momentum and opportunity, especially with video, is huge.
Whole Foods and Starbux have tapped out, in my opinion. Stay away in '06.
Picks for 2006
Hard to predict this year. There are few obvious winners. Even if you ignore these predictions, target estimates are still at +39%.
|06 picks||Ticker||12/31/2004||12/30/2005||05 Gain||Target Est||Targ %||06 Prediction||Pred %||Risk|
|Ford||F||$ 14.64||$ 7.72||-47%||n/a||n/a||$ 15.44||100%||Extr. High|
|Honda||HMC||$ 25.76||$ 28.97||12%||$ 31.82||10%||$ 43.46||50%||Low|
|Cisco||CSCO||$ 19.32||$ 17.12||-11%||$ 22.04||29%||$ 25.68||50%||Low|
|GOOG||$ 192.79||$ 414.86||115%||$ 414.57||0%||$ 539.32||30%||Medium|
|Yahoo||YHOO||$ 37.68||$ 39.18||4%||$ 42.92||10%||$ 50.93||30%||Medium|
|Apple||AAPL||$ 32.20||$ 71.89||123%||$ 72.65||1%||$ 89.86||25%||Medium|
|Motorola||MOT||$ 17.06||$ 22.56||32%||$ 25.69||14%||$ 28.20||25%||Medium|
|Walmart||WMT||$ 52.82||$ 46.80||-11%||$ 57.61||23%||$ 57.56||23%||Low|
|Infosys||INFY||$ 69.02||$ 80.86||17%||$ 80.57||0%||$ 92.99||15%||Medium|
|Toyota||TM||$ 81.87||$ 104.62||28%||$ 104.14||0%||$ 115.08||10%||Low|
|$ 371.26||$ 468.67||26%||$ 649.53||39%||$ 1,058.52||126%|