Wednesday, April 06, 2005

Google Announces More Mini for Less

Google Announces More Mini for Less

Businesses can buy Google search that is given to consumers free. The cost for search capacity of 100,000 documents is $2,995 and for 500,0000 is $30,000. is one of many to practice this method of distribution successfully. The number of ADBE users is an astounding 500 million. Most of these folks including me have downloaded a free Adobe Reader. Only those creating documents pay for the software.

Market sentiment is changing. There are tiny bubbles of optimism showing up all over the place. This morning one firm reported that WalMart is a screaming buy. Firms have upgraded stocks in many industries recently. Oil prices are in a mini retreat. The Big Bull Boom Bubble may not be as explosive as I think it will be but it is going to happen. Companies such as MSFT cannot go sideways forever while increasing the book value at 15% per year. Companies cannot keep selling equipment at above average profit margins and not see the stock price increase.

The latest decline in search tools by Google is just one more productivity enhancement. It will help many businesses lower their costs and will help many customers find more information more quickly. Who needs to tie up customer service personnel if the information is sitting on your personal computer? Hold on to your hat; a market BOOM is coming soon!

Investors need to increase their exposure to stocks and real estate and decrease their exposure to bonds. I spoke to a broker from Smith Barney yesterday. This broker is considering the purchase of a second home at the beach. She expressed concern in regard to inflation, rising oil prices and rising interest rates as reasons not to buy real estate--I could hardly believe my ears. It was clear that she has been bombarded with so much negativity that she is not thinking straight. I asked her to consider the last time we had a major inflationary spike. From 1974 to 1983, interest rates rose, oil prices rose, home prices doubled and in many cases double the second time and the average small stock went up 1500% in value. BOOM!

My wife and I put 10% down on a house in November of 1974 and made 500% on our investment in 5 years while having a cheap place to live. The nominal returns on real estate are historically smaller than the returns on stocks. The beauty and risk of real estate is that one can typically leverage the returns at about a 4 to 1 ratio.

There was another oil supply build announced this morning. NY crude is trading below $56 again. T-Boone says prices will go over $60 this year and I am not willing to bet against T-Boone. That does not mean I am willing to sell my stocks including my airline stocks. Business is good, consumers are spending and together businesses and consumers are driving up the price of oil. This is not a bad thing. There will always be enough energy at the right price. The price will go up in good times and down in bad times. These are the good times!