Filed under: International markets, Google (GOOG), Apple Inc (AAPL), Cisco Systems (CSCO), Time Warner (TWX), Home Depot (HD), China, Indices, Halliburton (HAL), Altria Group (MO), NYSE Euronext (NYX), Goldman Sachs Group (GS), Duke Energy (DUK), Dow Chemical (DOW), Top Picks 2007, Valero Energy (VLO), PetroChina Co Ltd ADR (PTR), Huaneng Power Intl ADS (HNP), Level 3 Communications (LVLT), Chasing Value, Oil, S and P 500, DJIA, Rite Aid Corp (RAD), Savient Pharmaceuticals (SVNT)

For the most part, this year has portrayed itself as a stock picker’s market. If the stock you happened to pick was Google (NASDAQ: GOOG), which I included for fun because of its popularity, it beat all else as a portfolio of one.

The average of my seven picks fell as dramatically in November as it rose in October, reflecting the ebb and flow of the Chinese market. James Cramer’s average based on his nine picks sank as well, but not as much. While Cramer managed to stay ahead of all the indices, and I beat the benchmark Standard & Poor’s 500 and marginally beat the Dow Jones Industrial Average, I lost out to the NASDAQ and the average of the three.

Last month, after reporting spectacular gains, I remained realistic when posting “Of course, this could easily change given recent market volatility. A sharp downturn in the market could reverse our fortunes. A lot can happen in the remaining two months — I take nothing for granted.”

Yes, Google has done well, but Cramer’s best, Apple (NASDAQ: AAPL) has done much better. It seems to be priced for perfection, as they say, but it also seems to be achieving it so far on the wings of the iPhone, iPod, and growing Mac sales. Warren Buffett voiced his opinion that the Chinese market has gotten bloated, and PetroChina ADR (NYSE: PTR), while still up significantly, dropped back off its all-time highs after becoming the second-largest capitalized company in the world.

The stock market has been volatile this fall, but has been showing signs of life recently amid anticipation of another cut in the interest rates by the Federal Reserve Board tomorrow. Most of what I have read has assumed the Fed will cut another half-point on Tuesday.

The Dow Jones Industrial Average is within striking price of its all-time high above 14,000, reached late last July.

November was somber, taking financials, housing, and construction down and deflating the Chinese markets. December is already retracing some of November’s give-backs. Consumer spending still seems to be tepid, so it must be the holiday spirit of the federal government that has the market bulls in high spirits. Earnings reports have been mixed, and will not begin again in “earnest” until next month. Year-end planning has made me tardy in completing this post. I like to get it done in the first few days of the month.

Summary of Results:

• Google (NASDAQ: GOOG), like most everything, was down in November but started climb back. It is still a favorite on Wall Street. Few investors have even paused to take a breath in October. GOOG closed at $707, for a solid +52.85% gain through the first 10 months of the year, holding the top spot again, and by a widening margin.
• Jim Cramer’s average return on his nine picks was 12.45% over the 11 months, beating the Standard & Poor’s index, the DJIA and the NASDAQ, and changing positions with me this month. Adding the dividend portion of 0.6% (0.66% x 0.916), brings Cramer’s gain to +13.05%. Apple (NASDAQ: AAPL) was his best pick again. All the new products and software launches, plus the continuation of current products and programs, almost assure that 2007 will another one for Apple’s record books.
• All of the indices lost ground in November, with the DJIA, NASDAQ and S&P all dropping. The Nasdaq returns for the YTD are making a respectable showing, with an overall average of +6.9% year-to-date. Adding the portion of the dividend yield of 1.65% (1.8% x 0.916) brings the total gain to +8.55%, a notable return on investment, beating out most fixed income securities. This is a reminder that just by being in the market, the most conservative of investors would do well.
• My picks went down considerably in November, falling from +18.14% to a +4.65% gain year-to-date. Adding the dividend portion of 2.65% (2.89% x 0.916) brings the total return to +7.3%, beating the S&P but falling behind the indices average for the first time this year with only a month to go. Very unimpressive. PetroChina ADR (NYSE: PTR) was the leader for the second month, but it’s down about $50 a share this month, followed by Valero Energy (NYSE: VLO) which has been strong all year. Huaneng Power International ADS (NYSE: HNP), has been up and down but always deep in the black. Time Warner Inc. (NYSE: TWX), continues to be a huge disappointment.

Note that portional dividends have been added to the results. This is one of the criteria I use in my stock picks, and it is having an impact on the results thus far. Only three of Cramer’s picks pay dividends, averaging about 0.66%. The indices pay a higher average of 1.8%, and my picks average still higher at about 2.89%. Google does not pay a dividend. The flatter the market is, the more dividends are a factor in overall returns.

Two of my picks continue to be mentioned as buyout candidates, but the rhetoric has died down considerably: The Dow Chemical Co. (NYSE: DOW) and The Home Depot (NYSE: HD). Home Depot continues to receive the most negative sentiment, and the crushed housing market is keeping it from rebounding despite what many market watchers see as a deeply discounted turnaround play, and I would agree. I am even considering Home Depot again for next year.

The following are the closing prices as of December 28, 2006 and 11 month returns for the seven stocks I recommended, plus the addition of Spectra Energy Corp. (NYSE: SE) that was spun out of Duke Energy (NYSE: DUK). Among Cramer’s picks, Kraft Foods (NYSE: KFT), which was spun out of Altria Group Inc. (NYSE: MO), is included in the calculations.

1. The Dow Chemical Company (NYSE: DOW): $40.02 is Up to $41.94 (+4.8%) 3.54% yield
2. Duke Energy (NYSE: DUK): $33.02 (incl. Spectra Energy (NYSE: SE)) is Down to $32.11 (-2.76%) 4.31% yield
3. The Home Depot Inc. (NYSE: HD): $39.73 is Down to $28.56 (-28.11%) 2.31% yield
4. Huaneng Power International ADS (NYSE: HNP): $36 is Up to $42.90 (+19.17%) 3.62% yield
5. PetroChina ADR (NYSE: PTR): $142.12 is Up to $191.74 (+34.91%) 4.5% yield
6. Time Warner Inc. (NYSE: TWX): $22.00 is Down to $17.26 (-21.55%) 1.1% yield
7. Valero Energy (NYSE: VLO): $51.61 is Up to $65.07 (+26.08%) 0.84% yield 2.89x.916=2.65 6.87%

The following index comparisons are also from December 28, 2006:

• Dow Jones Industrial Average: 12,501.52 is Up to 13,371.72 (+6.96%)
• NASDAQ Composite Index: 2,425.57 is Up to 2,660.96 (+9.78%)
• Standard & Poor’s 500 Index: 1,424.73 is Up to 1,481.14 (+3.96%)

The Cramer Speculative Stocks for 2007: 12.45

1) Level 3 Communications (NASDAQ: LVLT): $5.66 is Down to $3.36 (-40.64%) No dividend
2) Rite Aid (NYSE: RAD): $5.49 is Down to $3.72 (-32.24%) No dividend
3) Savient Pharmaceuticals (NASDAQ: SVNT): $12.01 is Up to $14.06. (+17.07%) No dividend

The Cramer Growth Picks are:
1) New York Stock Exchange Group (NYSE: NYX): $97.51 Down to $86.60 (-11.19%) No dividend
2) Apple Inc. (NASDAQ: AAPL): $80.87 Up to $182.22 (+125.32%) No dividend
3) Cisco Systems (NASDAQ: CSCO): $27.42 Up to $28.82 (+5.12%) No dividend

The Cramer Value Picks are:
1) Altria Group (NYSE: MO): $86.23 Up to $77.56 (+Kraft at .692024 x $34.55 = $23.91) to $101.47 (+18.65%) 4.12% yield
2) Goldman Sachs Group (NYSE: GS): $200.80 Up to $226.64 (+12.87%) 0.72% yield
3) Halliburton Co. (NYSE: HAL): $31.26 Up to $36.61 (+17.11%) .97% yield

The New Powerhouse Google

Google had an amazing month in October, reaching towering heights, only to see lows off about $100 in November, but it finished strong in a volatile market. After eleven months of tracking Google, it has grown to be one of the largest capitalized companies in the world, now exceeding $200 billion, and remains of broad interest to the investing public and internet users alike. Google closed December 28, 2006 at $462.56, rose in January, then traded downward for a few months before rising again following the overall market. But in the last few months it has been hot. Google ended November at $693.00, for a solid YTD gain of $230.44 per share (+49.82%), slightly off last month’s YTD gain. Google does not pay a dividend.

In Closing

What can I say about BloggingStocks’ parent company, which has faltered all year long: Time Warner (TWX): No catalyst or no leadership? Some comparisons. No invitation has yet arrived to a board meeting to share my thoughts, and I guess I should not expect one. Cramer is thinking the same thoughts about Rite Aid, and Level Three, no doubt. I will continue to report during the week following the closing stock prices each month. Only one month to go!

Disclosure: I own shares of BRK.B, DOW, DUK, HNP, PTR, SE, TWX, and VLO.

To find more potential opportunities and verify my track record read Chasing Value or Serious Money.

Sheldon Liber is the CEO of a small private investment company and the design and research principal for an architecture & planning firm. Check out his other posts for BloggingStocks here.

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This entry was posted on Monday, December 10th, 2007 at 8:27 pm and is filed under Goog news. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.