See Ya 2011, On to 2012, Israeli Startups, Google's New Ad Format, and Issues at Sears!!!

The last week of 2011 has been a good microcosm of what much of the entire year looked like, a market undecided about what it believes. Going into the last day of the last week of 2011, US equity markets are slightly ahead of where they started 2011, like a rolller coaster which ends up where it started, and both have had their heart thumping drops and exciting climbs to the top. However, as usual, companies which had stocks that were egregiously priced eventually saw the froth taken out of their share price, be it Green Mountain by the always astute David Einhorn, Netflix, Molycorp, Human Genome Sciences, or any number of others which pop to mind (Salesforce, Opentable, etc). Many companies had good performance which was rewarded, and as usual, those which did not make money or had poor results were punished severely. As 2011 comes to a close, I find it interesting gold has not held up very well these last few weeks as I am sure many investors want to lock in their massive gains in the metal's price, especially if you had invested five or ten years ago when it was dirt cheap. The price of oil has hung in there pretty well, certainly helped by the saber rattling of the Iranians with respect to the Strait of Hormuz. Still, much of what I read about oil leads me to conclude the United States is gradually moving towards developing and our huge natural gas supplies through fracking based exploration, and combined with the development in the Canadian Tar Sands, and increased activity efforts in the Gulf of Mexico and other parts of South and Central America, OPEC's choke hold on mature countries may not last more than another decade, and hopefully sooner. The quicker we can not rely on lunatic countries for our oil supplies the better. Romney has taken a bit of a lead in Iowa, so with a few days left before the first primary, we will see what happens but the Republican nomination might be over pretty quick, especially if he takes Iowa, and then follows it up with a big romp in Massachusetts, after which he would head to South Carolina with a ton of momentum. Interesting situation developing in Israel with reduced funding for startups by their government- http://www.bloomberg.com/news/2011-12-29/google-backs-israeli-startups-as-local-financing-hits-12-year-low-tech.html Google is testing a new advertising format-http://techcrunch.com/2011/12/29/google-testing-new-email-subscription-ad-format/ The problems at Sears are instructive of a few good lessons. First, Eddie Lampert has been a great investor for a long time, and is a brilliant guy, but what did he know about big box retailing, especially considering the worthy competitors like Wal-Mart, Target, Home Depot, Lowes, Amazon.com, etc? Second, when companies do not reinvest in their basic business, in this case merchandising, product assortment and breadth, and human resources (among others), it is hard to break the cycle of losing customers and reduced sales. With the shares down 80% from their all time high, maybe Mr. Lampart will rethink his strategy-http://online.wsj.com/article/SB10001424052970204632204577129122795672382.html?mod=WSJ_hp_LEFTWhatsNewsCollection Finally, I hope everyone has a healthy and happy 2012! If you have any comments or questions about this blog, please post them, I love your feedback! Happy new year everyone! As always, on any company mentioned here, past performance is not a guarantee of future returns. Investing involves risk of losses on invested capital. One should research any investment and make sure it is suitable with your objectives, risk tolerance, risk profile liquidity considerations, tax situation, and anything else pertinent to your financial situation. Also, the CFA credential in no way implies investment returns will be superior for any charterholder.