Thursday, May 26, 2011

Low Price Anomaly

Here's an interesting link to an old article on how low priced stocks performed on the Johannesburg stock exchange: not well. So what? Well, it collects some papers on the U.S. stock exchanges showing that low priced stocks outperformed higher priced counterparts over time. My analysis of my own portfolios has led me to conclude that you're generally better off buying lower priced stocks. And I mean under $10, or better yet under $5. The phenomenon is apparently well known in the literature and it's called the "low price anomaly."

Monday, May 23, 2011

Facebook; 5 years; 50%

In five years, Facebook will be worth no more than 50% of what it is now. Why? Because the people who use it now will grow tired of it or they will have more competition for their time from new sources. The people who don't use it yet will want something new (remember MySpace?) that helps them form their own online identities. As an example of both of these phenomena, check out Like a Little ( With internet sites like Facebook, you're not competing for dollars but for time (or attention, if you will). There is a finite amount of time (24 hours times number of people with internet connection). Ultimately, Facebook will fall to this unalterable law, as have so many others already. See also Ebay auction numbers for the quickly dwindling appeal of what seemed like the hottest concept ever less than a decade ago.

Sunday, May 22, 2011

Google Will Acquire Motorola Mobility

Greetings to all. Let's get this blog started with a bold prediction which, frankly, is this blog's business. Google will ultimately buy/acquire Motorola Mobility. Smart phones are going to be too important to the world going forward for Google to feel comfortable allowing third-party manufacturers to handle development. Google already has a close relationship with Motorola Mobility (MMI), having developed the Droid together. Also, Motorola Mobility's spin off from the former Motorola reflects, I believe, its own suspicion that this deal could ultimately happen. I know what you're thinking: if Google buys Motorola Mobility, it will alienate other smart phone makers using the Android platform. True, but that will ultimately not prove to be enough of a barrier to this deal. Time frame: 5 years.