Tuesday, February 28, 2006

Google Press Statement

I didn't offer any real commentary on Google (GOOG) in my daily column since I hadn't been able to track down any accurate reports of what Google actually said. I see now that Google has just issued a press statement that "clarifies" what they had said or supposedly said. I'll read it in the morning to digest it more fully. I suspect that people grossly overreacted to a gross mis-reporting of some overly-casual comments. That's so typical for Wall Street and illustrates why you should ponder information after "sleeping on it" rather than acting on it in a knee-jerk manner. Here's the core of Google's press release:

We would like to clarify and provide further information on these statements. As we have stated before, monetization improvements will continue to be a key factor in driving future revenue growth. We still see significant opportunities to improve monetization and intend to continue to focus our efforts in this area.

Moreover, as we have stated in our SEC filings, our revenue growth rate has generally declined over time and we expect that it will continue to do so as a result of the difficulty of maintaining growth rates on a percentage basis as our revenues increase to higher levels.

What could be simpler? Answer: On Wall Street, nothing is simple.


Please read our Stock Market Outlook for 2006 and our Daily Stock Market Commentary.

-- Jack Krupansky

Saturday, February 25, 2006

Entrepreneurial Connections Conference 2006 (EntConnect 2006) coming up on March 23-26, 2006

Every year there is a small but loyal group of former readers of the former Midnight Engineering magazine who gather in the Denver, Colorado area for a conference known as Entrepreneurial Connections, or EntConnect for short. These are people who have a background or interest in technology and are either running their own businesses or would like to be running their own businesses. Some attendees don't have quite the depth of technical background, but are simply interested in the special angle on business that the conference offers.

This year's conference is being held on March 23-26, 2006.

The conference is run by John Gaudio. Details on the conference can be found on his official conference web site at www.EntConnect.org, or you can check out descriptions of past conferences at my Enrepreneurial Engineers web site.

So, if you're in the Denver, Colorado area, or you live in a galaxy that is within teleportation range, and you're a technical entrepreneur or have entrepreneurial aspirations, consider checking out EntConnect this year. Even if it sounds as if you might not fit the profile of a typical attendee, you might consider the conference anyway. Sure, a lot of technology gets discussed, but the focus is running your own business and thinking like an entrepreneur.

Tell John that I sent you. [Really -- I get a commission!]

-- Jack Krupansky

Monday, February 13, 2006

Google stock price

I read the following crap from a reputable news wire that I will leave anonymous to avoid their unnecessary embarrassment:

Google Inc. shares fell as much as 5% Monday after a published report speculated that increased competition mounted by the Internet search leader's main rivals could crimp future revenue growth.

Yes, there was a negative cover article in Barron's, but so what? There is actually nothing here that is new news since the moment Google was founded back in 1998.

Barron's even admitted that their "methodology" was "less than scientific."

Get real: There is always and ever the prospect of "increased competition" for all products and services. When was there ever a moment in Google's entire existence when that wasn't true?

The bottom line: It's a slow news day today, so reporters and "correspondents" have to squeeze every drop out of every piece of non-news that they can. The "issue" over this "report" in Barron's will be ancient history by the end of the week.

It's an embarrassment to the investment community that Barron's and it's followers act in such a useless manner.

I don't and have never owned Google's stock and have no recommendation on the stock. I simply think the flap over this so-called "report" is plain simply silly, undignified, and downright unprofessional.


Please read our Stock Market Outlook for 2006 and our Daily Stock Market Commentary.

-- Jack Krupansky

Wednesday, February 08, 2006

Where Else are Investors Going to Go?

John Hussman of Hussman Funds has a Weekly Market Comment for January 30, 2006 which includes this amusing (or maybe not so amusing since it's painful for so many investors) parable:

A guy hears the doorbell ring one morning, opens the front door, and there's a snail on the doormat. So the guy picks up the snail, walks through his house, and tosses it out to the back yard. A few years later, the doorbell rings. The guy opens the door, and the snail just looks up and asks “now what was that all about?”

Treasury bills – despite unusually low yields during the past several years – have outperformed the S&P 500 index, including dividends, for what is now more than seven-and-a-half years (for an annualized total return of about 2.6% during this period). Stocks have gone nowhere, but they've gone nowhere in an interesting way. That's the problem with rich valuations – not that stocks decline predictably or persistently. Just that investors go through years of fluctuations, faithfully holding their stocks as investments, and in the end, find themselves just like that snail.

Do you feel like that snail?


Please read our Stock Market Outlook for 2006 and our Daily Stock Market Commentary.

-- Jack Krupansky

Monday, February 06, 2006

Treasury yield curve mostly inverted

In contrast to the past two months, when the Treasury yield curve was only modestly and partially inverted, most of the Treasury yield curve is now clearly inverted. We're not quite to a fully inverted yield curve, but we are well on our way.

Quite a number of people believe that an inverted yield curve "signals" that a recession is coming, but I'm not persuaded by arguments based on mere correlation, when causality has not been demonstrated.

Here's the basic yield curve, courtesy of Bloomberg.com:

The 30-year (actually 25-1/2 year) yield is now below the 6-month yield (inverted).

The 10-year yield is now the same as the 2-year yield.

The remaining good news is that the curve is not inverted from 5-years out. That may seem like small solace, but it may prove to be the key to resolving the uncertainty about the meaning of the current yield curve.

For now, the yield curve is a tale of two distinct stories: the 6-month to 5-year story and the 5-year to 30-year story. Reconciliation of the two disparate stories is an open issue.

Note: this chart will update automatically, so my statements about the chart itself may no longer be true by the time you view it.


Please read our Stock Market Outlook for 2006 and our Daily Stock Market Commentary.

-- Jack Krupansky

Saturday, February 04, 2006

The first new 30-year Treasury "long bond" is coming soon to a theater near you

Things could get crazy in the Treasuries market this week, including the yield curve, as people prepare for, participate in, and respond to the auction on Thursday, February 9 of the 30-year Treasury bond. This is the first auction of the 30-year bond since August 9, 2001. Right now, the longest duration Treasury is 25 years. I'm not even sure what the publishers of the yield curve really mean when they quote the 30-year yield.

In my personal opinion, it was always a huge mistake to drop the "long bond". It provides useful economic signals and is useful for retirement accounts. In fact, I think it makes perfect sense to go out further and have a 50-year bond. After all, someone who is 60 years old and shifting from stocks to fixed-income in preparation for retirement could very well live to be 110 years old.

In fact, if we are going to have privatized Social Security, Treasury should have 100-year bonds that young people could buy or use as a benchmark for their long-term retirement future. Sure, you may want to have part of your retirement investments in stocks, but it makes perfect sense to have at least part of it in the most stable possible long-term investment.


Please read our Stock Market Outlook for 2006 and our Daily Stock Market Commentary.

-- Jack Krupansky

Wednesday, February 01, 2006

Latest PIMCO "Bond King" Bill Gross monthly February 2006 Investment Outlook (IO) letter, entitled "Curveball"

PIMCO's "Bond King" Bill Gross has posted his latest monthly February 2006 Investment Outlook (IO) letter, entitled "Curveball." I haven't read it carefully yet, but it seems to suggest that the Treasury yield "curve" (hence the title) is going to behave in a rather atypical manner in the coming years. From my quick scan, I was unable to discern his outlook for the target fed funds interest rate, the rest of the yield curve, or the economic outlook for the coming months.


Please read our Stock Market Outlook for 2006 and our Daily Stock Market Commentary.

-- Jack Krupansky