Thursday, June 15, 2006


Mid 1990's and mid 1980's the market transitioned from a consumer lead recovery to a business lead expansion. After the transition, the stock market was up 40% from January 2 to September 1, 1987. I don't remember the numbers but the market was up huge in 1996 to 2000. In each of the prior decades, the market went through a tough rotation before it took off. So far, the action most resembles what happened in the 1990's. Stocks, gold, real estate and about everything else suffered a couple of months before the last of the FOMC increases. Then about three weeks before the last increase, the market sniffed the end. The markets began to move. There was a bounce in metals, resources and energy stocks but when the rally hit second gear, it was new leadership that took off. In two weeks time, three important events will occur. The Iranian deadline will pass, the FOMC will meet and Google will launch GBuy. Most everyone has some sense of the importance of the first two events. However, the Google launch is in some ways the more important of the three. The new super network being built by Google is more powerful than most folks can imagine. Yes, MSFT and Yahoo are spending billions to construct similar networks but the Google network is way out in front. Many a corporation has all employees linked on a network but most cannot come close to doing all the things that the Google network will do. GBuy is a great example. Many folks think that GBuy is nothing more than a PayPal clone. These folks thought that GMail was nothing but a Yahoo clone. As you might guess, GBuy includes key features that make it much more powerful than PayPal. Billions of people the world over would like to reduce the amount of time wasted in reviewing non relevant advertisement. There is room for a huge savings. Do you get junk mail upon junk mail? Does it take you 30 minutes to watch 18 minutes of TV content? GBuy is going to save you and me hundreds of hours and advertisers billions of dollars. Yes, just like when GMail was launched, there will be those who fuss about losing their privacy. Let them fuss. For me, I prefer for Google computers to track which products and services I am willing to buy. As a trade off, I expect to watch videos, visit web sites, read the news, receive emails and play games without being constantly interrupted with information that I do not want. I would hate to guess how many feminine hygiene adverts I have seen in my life. More importantly, how much time I have wasted on these ads. Do you see how the above information about GBuy and the rotation in the 1990's relate? In the second half of the 1990's, spending to build out the internet was huge. Consumers and businesses bought routers, high powered computers, software, digital equipment and much more. The next round of spending is underway. The dream of the 1990's that the whole world would be linked by high speed fibre optic cable is going to be realized. In the near future, it will be common to see internet connected computer terminals all over the place. These terminals will not need to be fancy, just a keyboard and a screen. In many cases the keyboard will not be needed. Insert your flash memory card into a terminal and that terminal will know who you are and it will provide you with the exact information you need in a hurry. Wireless pocket computers will communicate with these terminals to provide an abundance of services that have not even been invented yet. Are you ready for round two of the internet bubble? Bubbles are a lot of fun if you are an early investor. Common sense says to buy when stocks are down. Now is the time to add funds to your stock investments. BUY THE BULL! If you have questions about the market, send me an email