Rafael Grillo

Online Ad Revenues Up: Is the Worst Over?

In a tough economic situation, advertisers indeed cut their advertising budgets. But they don’t eliminate them. They can’t afford to. They need to keep selling! If any, as an advertiser you re-direct your reduced budget to the most effective touchpoint you have available. If you had campaigns going in different mediums, you focus on the most effective ones and cut the rest. Search advertising raises to the top in a situation like this. And If you had campaigns going in Google, Yahoo and Microsoft, you cut the last two and put all your money behind Google. I expect to see an increase in Google's share in the forthcoming quarters.

If Only Hope Were an Investment Strategy

Great comments! There are no bullish signs out there. None. There is not reason for the stock market to go up. More and more, the not-so-long-ago unthinkable scenario of Dow 6500 becomes a possibility. At some point, I even considered the 8000's very unlikely. Yet, I have to agree that some stock prices have reached an almost surreal level. It feels like we are heading towards a dramatic depression. And yet, folks, I truly believe a depression like the 30's has been averted. The recession will follow its course: people will curl in their homes waiting for end of the times, a few strong companies will take the opportunitiy to strengthen their positions, and after a few months, we will realize the sun still come up everyday and we will go out and re-ignite the economy again. I am not trying to under-estimate the challenges ahead. But I think the worst part of the financial crisis is behind us. It is re-construction time. Taxes will have to raise, we will have to curtail our consumption, interest rates will have to go up (think 3%) and a few inefficient companies will have to disappear (think auto industry). This has been an economic earthquake. The plaques had to reacommodate and the pressure liberated. The pain is not over. But tthe overall stock prices, at these levels, are pricing this adjustment. We will be in a 7500-9500 trading range until next summer. Dow 10,000 by third quarter next year, and then, slow growth. Expect the new Government to launch a national initiative to re-energize the country behind renewable energy. Get positions in wind, solar and nuclear at some point during the next quarter, but be prepared to sell. That is going to be the next short-term bubble; after that, they'll become a solid investment for the long haul. Pollyannish? Perhaps. But I think we are rather rattled by the violence of this correction. We've had in a couple of months what took two years and a terrorist attack to unravel in 2000-2002. There is light at the end of the tunnel. And, by the way, Toro and I must have the same portfolio: I am sure if I sell now, this was the bottom; and if I don' sell, we will get to Dow 6,500 :-).

Was Peter Lynch Wrong? Crocs and Other Trendy Companies

I've written a couple of articles in my site about this same topic. It is possible to identify great companies and great products that meet fundamental consumer values and should generate significant returns over the long term by observing their action in the marketplace. By the same token, and paying close attention, it is possible as well to discern which are just fads or niche products. Nothing wrong with riding Crocs all the way to $75. But that was it. There is nothing left in that stock. The most serious financial mistakes are made when people consider these declines as buyable dips. Crocs is not a $75 disguised as a $12 one.

Why Google Invested in Clearwire

As dominant leader in the online search and advertising market, Google's fundamental strategic opportunity to generate huge growth is to increase distribution: have more people spending more hours online. Not that different from Coke -or any other mass-appeal marketer for that matter- placing vending machines in everyone corner. In that sense, tearing down any barrier that might keep consumers off-line plays directly in Google's favor. Google will throw all its muscle behind any opportunity that allows them to capture what is now dead off-line time: think commuting, travelling, lunch, leisure, etc. Literally billions of ad/hours (clicks in their ads!) they are not reaching now. Their dominant market share would assure them by default 70% of that new revenue stream. That is the limitless promise of WiMax. All the points made in the article are valid, but basically basically point in the same direction: expanded distribution is the main driver behind these investments. This is a real smart use of resources. Gosh, they're good!

On Yahoo/ Microsoft: Jerry Yang Should Be Fired

Interesting action on YHOO today. It seesm the doom and gloom scenario didn't play out. The market is waiting for Act II and I think we will se more of this MSFT-YHOO deal. bill d: hold onto those options. You may break even. In any case, I seriously doubt YHOO has any significant future. As per MSFT, I think their corporate culture is way screwed up as to ever build a significant presence in the Web. The would simply smother anything they touch. Gosh, even their software is flailing! (Vista anyone?)