Commentary on Markets

Finally long-awaited interest rate cut is here and that also came with big bang. For many folks and even for stock market which tracks every word of Ben Bernanke, this looked like surprise. IMO, this was very much expected move and one of the reasons I wrote my previous article "is it time to buy", it was clear that mid-Aug provided ideal opportunity to make some bets. Here is report-card on how my recommendations did over 5 weeks - pretty good record considering one returning over 50% and only one in negative (which is housing stock and looks like we have yet to find the bottom of housing market)

Symbol	Price on Aug 17	Price on Sept 21	% Gain
UUPIX	33.56	52.57	56.6%
FXI	119	168.48	41.6%
IBN	38	50	31.6%
APPL	117	144.15	23.2%
AA	32	37.4	16.9%
LLNW	7.56	8.47	12.0%
VGTSX	18.02	20.16	11.9%
BX	23	25.32	10.1%
FISMX	25.58	27.98	9.4%
FLVCX	30.96	33.57	8.4%
WCI	7.76	6.96	-10.3%

When I was watching CNBC, my 9-yr old son Yash asked me question about who is Ben Bernanke and why they keep on talking about him. I explained to him that after President Bush, Ben Bernanke is the most powerful person in the world and how his talk can move markets around the world. I was telling him that uncle Ben is going to give a gift on Tuesday Sept 18 (and I ended up explaining him how:-)

So now that rate cut is behind us and markets around the world has responsded enthusiastically, what's next ? Is it still time to buy or sell ?

Here are my predications:

1. US markets would close at least another 5% higher by year end putting DOW above 14000 and S&P closer to 1600
2. Emerging markets would continue to head higher with BSE Sensex closing above 17000 and Shanghai Index closing above 5600
3. There would be few more causalities due to subprime and housing markets but by year end, housing market would start showing some trend reversal with housing stocks rebounding by at least 10-15 % from today's levels
4. Technology and Internet stocks are going to have a great year-end finish
5. And most importantly, Fed interest rate remaining at 4.75% for rest of year

So with these macro-economic predictions, it is upto individuals if they still want to take fresh positions.

Now coming to India stock recommendations:

Reliance companies keep on marching higher and higher. Every company with Reliance name and Ambani connection is going higher. I won't be surprised if Ambani brothers become world's richest men in 10 years. For now, here are two recommendations from Reliance group:

1. Reliance Petroleum: This is building biggest refinery in the world and did IPO at Rs 60 about 10 months back. Today it is at Rs 154. Since there is so much under-investment in refinary around the world, this company has great potential. It is supposed to be going online in 2009 and I won't be surprised if it hits Rs 250 in 18 months (for 64% return)
   
2. Reliance Natural Gas: This is little-bit speculative play which have tripled from Rs 24 to Rs 76 in last 6 months (with 35% coming in on Friday Sept 21). However due to its Reliance and Natural Gas connection, it would easily cross Rs 100 in 12 months (for 31% return)

On US my recommendations are same as Model Portfolio I published at start of year in previous arcticles. I will be providing YTD returns next week when Q3 ends. Despite ups and downs of summer, I promise that it would be a positive surprise.

Reading wise, I am waiting for my Amazon delivery of Greenspan book - Age of Turbulence

/Shyam

Hidden Gems of Emerging Markets Investing

I am a student of macroeconomics and like to read about various macro-economic factors such as inflation, interest rate, labor productivity, education and how it impacts long-term prospects of a country. Based on such analysis, I like to come up with investing strategy and find out mutual funds, stocks or ETF and recommend them and invest personal money to test out these strategies (put your money where your mouth is:-)

Based on prominence of BRIC (Brazil, Russia, India and China) countries, I have been looking for ways to go beyond BRIC countries and look at other emerging countries. Countries in Laton America, Asia and Eastern Europe have been growing as fast or faster than BRIC countries and provide excellent investing opportunities.

Check out following article - top 3 countries are non-BRIC countries in emerging markets with Peru topping with 168% returns

Top 10 places to invest

However investing in one country or index poses significant risks due to political, social factors which are beyond individual investor's control.

So it is best to invest in a mutual fund focussed on large number of emerging markets. In my search for such mutual fund, I came across following two funds.

ULTRAEMERGING MARKETS PROFUND (UUPIX):
The investment seeks daily investment results that correspond to twice the daily performance of the Bank of New York Emerging Markets 50 ADR index. This fund invests at least 80% of assets to equity securities contained in the index and/or financial instruments that have similar economic characteristics as the index. This fund has YTD of over 32%. However this fund is only for investors who can tolerate swings of 10% in a DAY. But as long as your believe in macroeconomic factors of emerging countries, it provides excellent way to profit from it. I typically have a investing strategy of 35-50 for this fund means buy when it goes below $35 and sell when it goes above $50.

Vanguard Emerging Mkts Stock Idx (VEIEX):

The investment seeks to track the performance of the MSCI Emerging Markets index. The fund employs a passively managed investment approach by investing all or substantially all of its assets in a representative sample of the common stocks included in the MSCI Emerging Markets index. This index includes approximately 840 common stocks of companies located in emerging markets around the world.

This is fund for long-haul and provides an excellent way to get exposure to emerging markets at very low cost. It has YTD returns of over 22%. My recommendation is to invest in this fund with automatic investment plan which Vanguard provides.

With these two funds, even though you will not get returns of one country which may be above 100% in one year and down by 50% next year, they provide excellent diversification with lower risks and costs. It also saves you from tracking what's happening in political landscape of Pakistan or what new trick Venezuela's president Hugo Chavez is going to play

Happy (and safe) investing in emerging markets !

/Shyam

(Disclaimer: I am personally invested in both funds)

Scorecard of 11 Recommendations

In last post titled "Is it Time to Buy", I recommended 11 stocks. My post was so timely as markets have returned to normaly with discount rate cut of 50 basis points and Fed and Bush Government all assuring that they are not going to let market turmoil impact economy. Q2 GDP also came in very strong at 4%. Let's see how my recommendations did in last 2 weeks:

Recommendation	Symbol	Price on Aug 17	Price on Aug 31	2-week Gain	Target Price
Profunds Ultraemerging funds	UUPIX	33.56	45.41	35%	50
Ishares Trust FTSE/Xinhua China 25 Index	FXI	119	150.31	26%	150
WCI communities	WCI	7.76	9.32	20%	12
Apple	AAPL	117	138.48	18%	150
ICICI Bank ADS	IBN	38	44.45	17%	47
Alcoa	AA	32	36.53	14%	40
Limelight Networks	LLNW	7.56	8.25	9%	14
Fidelity International small cap	FISMX	25.58	27.68	8%	28
Vanguard Total International	VGTSX	18.02	19.43	8%	20
Fidelity Leveraged company	FLVCX	30.96	33.19	7%	35
Blackstone	BX	23	23.13	1%	28

As you can see from above table, all recommendations did pretty good with best returns by Profunds Ultraemerging Funds (UUPIX) returning 50% in 2 weeks with China based EFT FXI close second with 26% returns. Worst returns were by Blackstone just returning 1% in 2 weeks (still not bad if you annualized it:-)

So now question is: Is it still time to buy or is it too late ?

With clam returning to markets, global economy still firing on all cylinders and given fed interest rate cut, I think it is still not too late to invest in stocks and mutual funds. S&P is trading at its lowest forward PE in many years and as long as global economies (especially Europe and Asia) are doing great, I recommend putting additional money to work. Even at current prices, I stand by my earlier recommendations since at target prices I have for-casted, there is still some room to extract returns from these.

India Recommendations:

Along with global markets, India markets have also gone thru a roller-coaster ride and slowly coming to normlcy. My current picks in Indian stock markets are:

1. Hindalco (Rs 142) - strong aluminum player and its just matter of time when its valuations catches with world aluminium players. Target price if 200 in 18 months (returns of 41%)
   
2. Mindtree (Rs 560) - This was one of the high-flying IPO in Indian tech industry. It went all the way to 1000 and came back to below 600 due to rising rupee. It has potential to go above 900 in 18 months (returns of over 50%)

/Shyam

Is it time to buy ?

What a week with so much volatility, Dow falling below 13000 and having almost 10% correction from its peak. In my previous posts, I did predict that Dow would touch 13000 again before heading back to 14000. So now question to ask: Is it time to buy again ?

To get to an answer, let's consider some macro factors:

• World's economy is having one of the strongest growth it has seen anytime in history. Almost all countries (save few countries in Africa) are growing at 2 or more percentage with some of the big emerging countries like India and China growing closer to 8-11%.
• Given right policy by central bankers, almost all countries are seeing relatively moderate inflation unlike in past when Latin American countries were known for their hyper-inflation
• Global economy is more integrated than any other time giving rise to productivity as there is most optimal use of capital not within country boundaries but across world
• Dow and all other indexes are going to stay here - they are not heading towards 0. So as long as you believe in long-term macros factors, this is great buying opportunity to invest in stocks and mutual funds. Every six months, one gets such an opportunity - last being in Feb 07 and before that in Jun 06.

Here are some ten investment ideas:

1. ULTRAEMERGING MARKETS PROFUND I (UUPIX): Emerging markets are still hot and this is best (and most risky) mutual fund out there. It has come down from 53 to 34. It has potential to go back over 50 by end of year giving 50% return in less than 6 months
2. VANGUARD TOTAL INTERNATIONAL ST (VGTSX): Best overall international fund. This is fund of funds and gives exposure to European, Japanese and emerging markets. Very low cost. It can return 10% by year end
   
3. FIDELITY LEVERAGED COMPANY STOC (FLVCX): In this market, leverage is bad word. But this fund invests in leveraged assets and has one of the best 3 year record. It can return over 15% by year end
4. FIDELITY INTERNATIONAL SMALL CA (FISMX): Best way to get exposure to international small caps. Can return 15% by year end

Some stock ideas:

1. Apple Inc (AAPL): At 117, it's almost no-brainer. After holiday season, this would be $ 150 giving 25% return
   
2. Alcoa (AA): As soon as takeover rumors gone, this has come down from 46 to 32. Just based on fundamentals and price which Rio is paying for main competitor Alcan, this stock is worth at least 40 giving return of 25%
3. WCI COMMUNITIES INC (NYSE:WCI): This is risky real estate play. However as long as it does not go BK, it can go back to 12 in no time returning over 70%. But again with residential real estate, you never know when it is going to recover. However I have read that whoever invested in real estate during 91 downturn made lot of money.
   
4. LIMELIGHT NETWORKS, (NasdaqGM:LLNW) This is one of the new IPO and main competitor to Akamai. Both companies got penalized due to slowing growth. But at 7, investors have over-reacted to bad earning news. This could go back to 14 in a year for 100% return

And here are last two ideas:

1. If you still believe that Chinese market is going to remain hot at least till Beijing Olympics, best way to get exposure is via ISHARES TR FTSE INDX (NYSE:FXI). At 119, it can return over 20% by Aug 08
2. And finally something in financials: Both Blackstone (BX) and 23 and ICICI Bank ADS at 38 look very attractive and can return over 30 % in next 6-9 months

Good luck in investing

(Disclaimer: I may have investments in some of the securities)

Harry Potter Mania

It was Harry Potter mania which has engulfed world forced me to come out of my summer hibernation and start writing on my blog again. I also went with Yash and Isha to buy final installment of Harry Potter series book. I must admit that it went just for the fun and till now have seen only movies (not read the first 6 books). I started reading the book and the plot is really interesting.
We saw hindi movie called "Partner". It is loosely based on Will Smith movie Hitch with all ususal bollywood masala. All of us did liked the movie - nice dance numbers at exotic locations and good comedy. If you are into bollywood movies, I do recommend this movie.
In last 6 weeks, I was more active on contributing articles to SeekingAlpha site. In fact couple of my articles did got published (editors of this site decide which ones to publish). Check them out:

1. Six reasons Yahoo should buy Joost

http://internet.seekingalpha.com/article/39271

2. Seven Reasons Why ICICI Bank is a Better Investment Than Blackstone

http://financial.seekingalpha.com/article/39418

My model portfolio is doing very good and in fact it is already on track to meet my objective of beating S&P by at least 2%. As of 6/30/07, returns was 10% as against 7% for S&P. Till then, it had done even better with YTD returns of 14.6% (compared to 7% for S&P). The portfolio's overweight on international markets and investment in FSESX were two major factors for this performance and I am sure it will continue to do better.

Quick update on India recommendations:

1. Aptech is at 360
2. Teledata is at 68
3. My latest recommendation of Zee News doubled last week trading at 71

My new India recommendation is RS Software at Rs 43. Is is very niche software company and in recent weeks it got penalized due to rupee appreciation and some company specific factors. Company have allocated warrants to current majority holders to buy stock at Rs 66. My target price for RS software is 87 by Dec 31, 2008 generating returns of over 100% in less than 18 months

Farmer's markets

I thought I will write anout something else today. Now that summer is almost here, I have break from my MBA classes and studies, kids are also wrapping up their school year, we love to go to Farmer's markets on Sunday morning. One of best Farmer's markets I have seen is at Santana Row, San Jose



It's all year round every Sunday from 10 am to 3 pm. They have lot of varieties of fresh fruit and vegetables. My most favoruite is of Ana's Corn. You should take a corn with butter and spices and relax on chairs nearby. Near Maggiano's they have band playing. Overall it is a great experience to spend Sunday afternoon at Santana Row - you should definately experience it!

Quick Commentary on Stocks:
As I predicted earlier, correction in Chinese markets have started with Shangai Index falling from 4300 to 3800 (as of Monday Jun 4 morning). That's about 12 % correction. I think it would go down till 3500 before rebounding in major way. Fortunately this time it has not brought down other world markets like in Feb. However if Shangai market breaks below 3000, it could start impacting other markets also (similar to what happened in 1998). For now with M&A activity in full swing, US and European markets would stay high for few more weeks before Q2 results start coming in.

US stock recommendation:
Simialr my India stock predictions, I decided to start posting US stock recommendations after doing some analysis. Here are my two recommendations for this week:

Circuit City (CC):
Circuit City is a major Electronics retailer (I just bought my Nintendo Wii at Circuit City after standing in line for 45 minutes on Sunday morning).
This stock has come down nearly 40% from its high and has a market cap of about $3B and cash in hand of about $740 M. It has sales of $12B. With new flat panel TVs and electornics gazettes, people are buying more and more electronics. Circuit city has started FireDog installation services which IMO has great pull-in value. With so much hand in cash with no debt and good brand name alongwith store locations, it is very attrective target for private equity. I spotted it first last time when it was 16 but in two days it went up by nearly 7% and now trading it at $17.13. I still recommend it as BUY at $17.2. My target price is 25 by Dec 2008.


Apple Inc (AAPL):
This company does not need any introduction. With iPhone coming on Jun 29, my target for APPL is 150 by Dec 2008. So my recommendation is to BUY at $118.

Update on India Stock Recommendations

Recently one of my stock recommendation Teledata has been on a roller-coaster ride. In recent times, it has been locked in either upper or lower circuit limit of 5% (in India, many smaller stocks have circuit limits of 5 to 20% to avoid extreme fluctuations). When I recommended it first time on one of my post, it has gone from 47 to 96 and back to 63. As per previous news, it should be demerging in 3 different companies by end of May. My recommendation is to HOLD and BUY more if it goes below 50. From financial point of view, it has excellent balance sheet and is winning orders from many state governments. It has good product in education and shipping management software. Unfortunately there is not much information available on management. So at this time I am giving them benefit of doubt and would hold onto these shares for potential windfall.

I recommended Zee news at 40 and finally it has started moving. Last week it was trading at 46. Finally market has started realizing the potential of this company. Recommendetion: BUY

My last year's recommendation Aptech is still going great guns at 320. Even after rising from 60 to 320 in less than 24 months, its total market cap is about $300 M. With continuning boom in IT and BPO industries, there is tremendous potential in training and Aptech has excellent brand recognition and geographical reach. My new target is Rs 400 by Mar 2008

For long-term, Idea looks very strong. Cell-phone penetration in India is still less than 20% of population and there is tremendous growth ahead for at least 5 years. After that these companies would benefit from value added services. If we go with cell-phone companies valuations in developed countries, there is lot of growth ahead for all cell-phone companies. I particularly like Idea due to its relative cheap valuation compared to other companies. Recommendation: BUY

Overall market direction commentary:
We are in middle of May and I am surprised with strength in global markets. Looks like the strength will continue for some more time (maybe well into summer) with flood of merger news coming every Monday. Just now I am reading that Goldman and TPG are making a bid for Alltel and couple more annoucements in billion $ deals. IMO market is at cross-roads and it is becoming less clear which direction it would take. If you are averse to risk, my recommendation is to move some of your gains in cash and keep it handy since there would be opportunities coming to buy market at lower level in next few months. DOW will see 13000 (from 13500 last week) before it sees 14000!

May commentary

Last week I completd second year of my part-time MBA at UC Berkeley - I was so looking forward to summer break after hectic spring quarter. I took Financial Information Analysis, Brand Management and Risk Management courses. All were pretty good courses. Did a marketing plan on Ebay and got a chance to take a closer look at how Eddie Lambert made billions with his smart move on Kmart. Learned couple of excel tools like Crystal Ball and Solver in Risk management course. Overall it was a good learning quarter.

It was an interesting week for markets which are becoming little bit frothy even for an aggresive investor like me. It is definately climbing peaks every week but I almost feel that end of rally is coming anytime.

Here are my predictions for rest of year:

• Now that SSE index has crossed 4000 (my earlier prediction was that it will reach 3500 by year-end), it reminds me of Nasdaq of 1999-2000 when it was crossing thousdand milestones in months. SSE index is almost reaching similar state. However the momentum is so strong that it may see past 4500 and even touch 5000 and then head for a major correction. Such a correction could bring back SSE index back to 3000-3500 range and impact markets around the world (the way it did in Feb 07) and could burn quite a few folks. My recommendation is to slowly divest holdings from emerging markets funds (while they are at their peaks) to money market funds and wait out summer for major correction. You will get chance to enter in this market at lower levels.
• Comparatively BSE index has gone nowhere during 07 and looks relatively cheap. However during emerging markets correction, it could see 12000
• Regarding European markets, they looks relatively safe considering mergers among big banks and other companies would keep the prices from falling significantly
• Companies in commodities are hot with Alcoa making bid for Alcan. The consolidation in metals/steel is going to continue till there are about 4-5 strong players. No other major industry has such a fragmentation as metals industry
• Indian Alpha Recommendation:
• Hindalco Industries: After Hindalco annoced plans to acquire Canadian company Novelis, Hindalco stock has come down from about 200 to 145. With Alcoa's bid for Alcan, Hindalco's move looks pretty smart and it's just matter of time before market realizes. My prediction for Hindalco's stock to reach 200 by end of FY08 giving returns of about 40% in 18 months (with downside risk of less than 15%)
  (http://www.forbes.com/afxnewslimited/feeds/afx/2007/05/11/afx3711220.html)

/Shyam

Commentary on Emerging Markets

Emerging markets (India, China) are hot again. Both SSE and BSE indexes are making records every day. From macro economic point of view, these markets are getting slightly ahead of their economies. If you are a long-term investor, then you don't need to worry since macro-economic, demographic factors are in favor of continuing growth for years to come with some bumps along the way. However if you are momentum player, you may want to watch out next few months. Remember last summer (I was in India at that time) when BSE index came from 12000+ to 9000. You may want to cash out some of your winners by Apr end and keep some cash handy to invest at lower levels. Same goes for China market
As saying goes in US, sell in May and go on summer vacation!

Coming to my individual recommendations in previous posts, here is quick update:

1. Teledata Informics still going strong. It is at 87+ and nearing my target of 100 within 3 months of my recommding at 47. Latest Q results were great and on annualized basis, it has P/E of 2 to 2.5. IMO, it deserves P/E of at least 5 resulting target price of north of 150. However since it has run up so much in last 2 months, it may have some corrections along the way. It is getting demerged by May 2007
2. Aptech: Still going strong and now trading at 315. There was a news that Infosys is going to use Aptech for training their new employees (My brother mentioned about this news since I cannot see ET completely). Based on that, Aptech has still great potential. I am revising my initial target from 200 to 400 in next 12-18 months
3. New recommendation: Idea Cellular.

• Idea is # 4 mobile provider in India with more than 11 million subscribers. Penetration of cell-phones is still at about 15-16% in India. India has potential of having about 500-600 million subscribers in next 5 years. Idea being # 4 should have at least 10% market share resulting in 50 million subscribers. Even if we value each subscriber at $ 500, it would give market value of $ 25 B in 5 years. Currently it has market value of about $ 7B. So my long-term (5 year) target for Idea is 450 (today it is trading at 115) giving return of approx 400% in 5 years. In near term, it should reach 200 by end of 2008.

India update and stock finds

Since my last posting on "seeking alpha in Indian market", my recommendation "Teledata Informatics" has increased nearly 40% in 2 months (from 47 to 65+) when BSE sensex has moved only sideways. Similary my last year's recommendations (Aptech) is doing great and just crossed 260+. I wish I can start some type of hedge fund focusssed on Indian market and apply my "alpha" finding skills:-)

My another prediction about SSE Composite Index crossing 3500 has already came true. It is trading at 3560+ as of Monday 4/16. IMO it is getting way overheated even to my taste. But momentum is very strong and I won't be surprised if it crosses 4000 by year end but along the way there would be lot of volatility.

Here is another "alpha" stock in India market:

Zee news:
This is spinoff from Zee entertainment mainly focussed on news in various languages. There are many news only channels in India (NDTV, Aaj-Tak, Doordharshan and so on) but Zee is one of the most recognised channel in India and has extensive reach. We Indians are also crazy about getting latest news and in many shops, some of these channels are on for most of the day. As an indepedent company, market has not realized full potential of Zee news and at current price of about 40 rupees, it offers great potential for significant returns (and hence alpha). My target price is 100 ruppes by Dec 2008 returning 150% in 21 months.

(Discliamer: I own small quantity of Zee news which I bought at around 38)

Next few weeks is going to be busy with my MBA final paper/homework submissions coming - looking forward to wrapping up spring quarter and having break for summer

Model Portfolio: Q1

As promised, I have been tracking my model portfolio regularly and here are the results and highlights of Q107 results.

• Model portfolio resturns were 2.22 % (compared with .6% for S&P). So at least till now, I am track to beat S&P by 2% points by end of year
• Best performaing asset was FSESX: FIDELITY SELECT ENERGY SERVICES which returned 15.59% and Yahoo stock was second with 12.73% return
• Worst performaing asset was Cisco stock which was down by 10.36%. Second worst was FXI:ISHARES TR FTSE INDX which was down by 3.31%
• Overall till now the portfolio is well balanced and even during late Feb sell-off held pretty well.
• I am not doing any adjustments to this model portfolio

Here are my forecasts for overall market:

• USA market will go sideways for next quarter till there is clarity on economy and interest rate direction
• Chinese market will keep on going upwards and Shanghai Index may break thru 3500 by quarter end (from 3250+ now)
• Indian markets will continue to go sideways and BSE index will touch 11500 before recovering to 13000. Elections in most populous state UP will impact elections (congress may do poorly in this state)
• Best investments would be still to get overall international exposure with Europe offering best risk/reward
  

/Shyam

Seeking Alpha in Indian Market

If you haven't came from another planet, you would have noticeed that lately Indian stock market has been on fire. Economy growing at about 9% per year, BSE index has been up about 40+ % in last two years. In such market, it's very difficult to beat the market when any stock you pick would do well. By defination, seeking alpha is nothing but find stocks which would return better than just by investing in any index funds.

I have been successfully investing in India for some time and have developed few skills to pick some stocks. At start of 2006, I have selected Aptech which I picked up at 130 rupees with target of 200 in 12 months. Check out in blog archives at:

Today it is 209 rupees. I recommended to some folks back home when it was 60.

But that was past (in stock market - no one cares about past) Let's talk about which stocks would do better going forward now that BSE index is at 14300 and it has become difficult to pick wining stocks. I am planning to write about one or two indian stocks periodically on my blog.


Teledata Informatics:
When I was in India in June 2006, I noticed this stock and found that it was trading at P/E of about 2 (at 14 rupees). This is an Indian software company with decent revenues and trading at P/E of 2. I could not believe so did some reaserch (with limited publications like capital markets). Decided to buy few shares to keep it on my radar. When overall market was breaking records, this stock remained in mid teens for few more months. People starting noticing it in last couple of months when it started moving from mid-teens and since then it has been locked at max 5% lock for quite few days. On Friday 2/15, it is trading at 47 ruppes. It has returned nearly 400% in 7-8 months.

It just published results for last quarter in which it earned 820 million rupees on revenue of over 3000 million rupees. With about 150 million shares, it is back to P/E of 2-3. It is going to be demerged in 3 companies with existing shareholders receiveing shares in all 3 companies. Unfortunately, there is dearth of quality information available on such companies. However considering it is mid-size software company and growing it's revenues and profits and demerging in 3 companies, my prediction is that it will touch
100 rupees by end of 2007..

I will talk about next stock in future posts (after I do some more research on other companies) ! Good night !

Vacation in Paradise - by Yash Maniyar

Our

Trip to Paradise

2006

By,

Yash Maniyar

" Swimming clothes

Sunscreen

Candies

Beach toys

Excitement

Camera ...,"

I read off the list I made while my mom packed the bags for tomorrow's Hawai'i trip. We were all so excited. My mom & dad were waiting to go to Hawai'i for 14 years. "Go to bed you guys. Tomorrow you have to wake up early," my mom said. So we went to sleep in our cozy beds. The only ones awake were me & Isha. We were talking about how much fun we were going to have in Hawai'i. "We're going to go snorkling!" I exclaimed. "Mamma said that we're going to have a swimming pool near our hotel room," Isha said as if she knew everything about our hotel already. I didn't know when we fell asleep but I had a feeling it was late.

The next morning, I woke up by the call of my mom. I jumped out of my bed & raced to the bathroom. I did all my "getting ready" work fast. After we did our last-minute packing, we got dropped off at the San Jose International Airport by our neighbor. We caught a 5 &1/2 hour flight to the Honolulu International Airport. We ate lunch at Burger King. By the time we finished our burgers it was almost time to catch our second flight to Maui. This flight was only half an hour. We landed at Kahului Airport.

The temperature was perfect to be in a swimming pool. We waited at a Hertz bus stop. When the bus finally came, we sat down & waited until it reached Hertz, a car rental store. My dad rented a silver Toyota Camry. We drove for 40 minutes to Kaanapali Shores, our hotel. Once we got to our hotel, we got room # 105. It was on the first floor. 100 minutes of flights & driving, it was worth it. Our condominium was perfect. There were 2 swimming pools, 1 beach the hotel was named after, & a beautiful garden. We explored our garden & the swimming pools. Isha & I even went inside one of the swimming pools. After a few minutes of swmming, we came inside & dried ourselves with towels.

Whaler's Village was where we were going to go next. Once we got there, we saw hula dancers doing the hula, ate pizza & ice-cream for dinner, I got a penny souvenir, & my mom went shopping. We saw the bones of a sperm whale. When we got back to the hotel, I was exhausted. We all went to sleep except me. I was wondering how the next day would be.

It was 5:30 a.m. when my dad woke me up. Today was the day I was waiting for. We would be snorkling in just a few hours."We're going to see corals, reefs, turtles, fishes, rocks, and...and...and" My list was endless. I heard people talking about snorkling all the time & it sounded fun. I got my water shoes, sunscreen, & swimming pants. Once we drove to Maalaea Harbor, a boat came to get us. Once inside, I ate a muffin for breakfast. Finally it started off to Molokini Crater, our first snorkling stop.Once we got there we got wet suits, flippers, & floating devices. We snorkled for half an hour. I saw millions of colorful fish.We got back on the boat & ate a burger. While we were going to Turtle Town, our second snorkling stop, we saw 3 humpback whales right near our boat! They were huge! When we arrived at Turtle Town, we snorkled for 20 minutes. I saw a huge amount of small turtles on the ground floor. When we were off to Maalaea Harbor once again, we saw a few bottlenose dolphins, a flying fish, & 1 more turtle. We arrived at shore & our family drived back to our hotel. We got ready for the party at Luau. We were going to see dances & eat dinner there. We got a shell necklace over there. When we got seated, I got pooped on by a seagull. My mom & I went to the restroom to wipe it off. When we got back, the show begun. There were lots of varieties of hula dances. I enjoyed watching. Then came dinner. It felt nice & warm in my tummy.I had sweet potato, noodles, rice, bread, chocolate cake, & pasta. We drove to our hotel & slept. I thought, this Hawai'i trip could be the most adventurous part of my life.

Just like yesterday, we woke up early again. "Why did we wake up so early?" I asked my dad. "We're going on the Road to Hana," he replied. "I want to see the Wai'anapanapa Black-Sand Beach," I told him. "Me too," Isha said. It was easy to get ready fast since everybody wanted to go on the Road to Hana. We started off to our first stop, Twin Falls. We stopped at one place to look at the view, then we kept on going. Once we got there, we had to take a trail to see the 2 waterfalls. It was a long trail, & I saw lots of plants. After a lot of walking we finally got to Twin Falls. I could smell guavas, I heard birds chirping, & I saw 2 waterfalls that looked identical. We went back the trail & into our car.Second stop, a view of Wai'anapanapa Black-Sand Beach! It took a while to get there. Once we did, we found a place that offered great views of the beach. The sand looked like a bunch of burnt coal just lying out there. Next, we drived to the Garden of Eden. There, we saw lots & lots of plants. First, we fed some peacocks & ducks. Then, we went to a picnic place to eat lunch, sandwiches. We looked at some more plants & then drived to a shaved-ice stand. My dad & Isha ate it & we all sat down for a while. The next place we went to was the Coffee Plantation. Over there we fed ducks & fishes. I found a smooth stick which rattled when you shake it. My mom went to a coffee store & got coffee. We went back to our hotel & Isha & I played at Kaanapali Shores.We came inside to eat dinner. We went to Kaanapali Shores once again. After a while we came inside & took a shower. That night, we happily slept in our beds.

My family woke up as happily as they fell asleep the last night. I was the most excited & happy because today we were going to go into a submarine-I've always wanted to get inside one!-& we were going to Haleakala Crater-I've always wanted to see a real volcano! First, we drove to Lahaina Harbor to get our boarding passes for the submarine. My family & I waited until a boat came to pick us up. It took us far out into the ocean. The boat stood until something emerged to the surface of the ocean. It was the submarine! The name of it was Atlantis. The driver called out groups to get inside. When we were all inside, it started to go deep into the ocean. The first type of fish the people saw was a yellowish colored fish. Later on we saw yellow trumpetfishes, all kinds of goatfish, the North Reef, the South Reef, an anchor, a sunken ship that had turned into an active reef, & more. The submarine even took us to the ground floor! Then, we had to go back to the surface. Without going to our hotel, we went straight to Haleakala Crater. On the way, we went to Kula Marketplace. For lunch, Isha & I ate raisin bread, chips, & string cheese since we didn't find anything vegetarian. Then, we drove to Haleakala Crater, this time without stopping. We had to go up a mountain to see the crater. At 5,000 ft. elevation we drove right through the clouds! At 10,000 ft. elevation, we were at the top. The clouds were 5,000 ft. below us! I saw the crater & what I saw inside was even cooler! I saw the top of a volcano! from there, we drove down 7 into our hotel. For dinner, we ate an indian curry. After dinner, I played in the swimming pool for a while. We came inside & took a bath.Next thing you know, we're sleeping.

We woke up early today because my mom & dad had to get ready for the flight back to the Honolulu International Airport in Oahu. My family & I planned to spend our last 4 days in a hotel in Oahu. My dad said that we could spend time at the beach while he & my mom got ready for the flight. After a half-an-hour of getting ready, we finally drove to the Kahului Airport. We got a short flight to the Honolulu International Airport. Once my family finally got there, once again, we got a Hertz bus. You know all about Hertz, so let's get on with it. After we got our purplish-blue Mercury Grand Marquee, we drove to Waikiki Sunset, our hotel. We had a beach near our hotel. It's name was Waikiki Beach. Waikiki Beach was the most famous beach in the whole wide world! The city we lived in- you guessed it! -was Waikiki. It was very urban there. There were tall buildings, lots of cars, lots of people, & a small amount of trees. Once we got to Waikiki Sunset, we got room # 603, which was on the 6th floor. After we unloaded our luggages, we went out for grocery. We also went to other shops, ate dinner at Cheeseburger in Paradise, & got a floatboard for me. After a while,

we went back to our hotel & peacefully fell asleep.

Today, my family woke up at 8:00a.m. It was going to be another

adventurous day today. We were in for some look-outs, bays,& more.

But most of all: we were going to hike up Diamond Head Crater! First,

we got ready. Next, we jumped into our car & started off to Diamond

Head Crater! Once we got there, I got a map of the trail. At first, the trail was easy, since there was sidewalk. In a while, the sidewalk stopped & a plain path took it's place. It was hard to walk without tripping. After a bit of walking, it got harder. They had added stairs & tunnels, too. Once we finally got to the top, we looked out at the view.We saw seagulls flying over the blue sea. We could see the whole city from up there! My family was amazed. I reminded them that we had a long way down. So we walked all the way down & got into our car. Next stop, Makapuu look-out! My dad drove there faster than I expected. Over at the look-out, I saw huge, black crabs. My dad & I thought they were cool. Isha & my mom thought they were scary.Next, Isha & I ate ice-cream at an ice-cream shop. After we finished our ice-creams, we all went to spend some time at Waikiki Beach. Isha made a sand-city with my dad. My mom & I made a sand-tunnel. We also played in the water,too. I used my floatboard & my dad got a floatie for Isha. It was almost time to go, so we got all our stuff & went back to our hotel. Once we were inside, we took a bath & went to sleep.

My dad woke us up by saying, "Today we're going to go to Dole Plantation." Isha & I got up & got ready fast. We both thought that we wouldn't be able to go there if we didn't get ready fast. The Dole Plantation in Hawai'i was one of the places I really wanted to go to. It had a life-size maze that was made out of plants! So we got into our car & set off to Dole Plantaton! Soon, we got there. I was very excited. We got inside the building & got our tickets for the maze. Soon, we were all in the maze. The target was to find all the tracing stations & come back to the entrance. I took 19 minutes to do it all. It took 20 minutes for my dad. My mom & Isha took 40 minutes. Next,went on the Pineapple Express. It gave us a tour around the plantation. We learned about pineapples & sugar canes. We drove across the north shore beaches to the Waialua Shopping Center to have a coffee break. I ate a bagel. My mom & dad drank coffee. After that, we drove back to our hotel. Isha & I both swam in the swimming pool. After swimming for a while, Isha & I took a bath. We went to the Ala Moana Mall. We ate dinner at P.F. Changs. After we ate dinner, we shopped for a while. After that we went back to our hotel slept "ZZZZZZZZ," we went.

Today, Isha & I woke up very late (compared with the other days). We both woke up at 8:00a.m. My family & I were going to Pearl Harbor to see the USS Arizona Memorial. My dad had told me that it was a sunken ship that was attacked by the Japenese soldiers. We all got ready & drove to Pearl Harbor. Over there, we ate a egg salad sandwich & chips for lunch. I also took a tour around Pearl Harbor. I learned about 5 Japenese submarines, Thunderfish (which was like an underwater missle), the USS Arizona before it was attacked, & more. Isha & I got an activity pad. We both worked on it until it was time to go to the memorial. Everybody who had ticket # 21 (which included us) went inside a theater to wacth a film of the attack. After the film was over, we got on a boat to the memorial. Once we got to the meorial, we saw through a hole that the ship was right under our feet! I saw 2 gun tubs on the ship. There was a huge wall filled with the people who had died during the attack. there was also a smaller wall filled with the survivors. After we all explored the memorial for a while, we got on a boat back to Pearl Harbor. Isha & I both got a Junior Ranger Badge since we had finished our activity pads. My dad drove us back to our hotel, where we changed into our swimming clothes & went to Waikiki Beach. I played on my floatboard, my parents joined me, Isha played with her floatie, & we all played in the sand. Then, we walked back to our hotel & took a bath. We ate dinner at the Cheesecake Factory. My dad & I ate pizza. My mom & Isha ate pasta. For dessert, we sunk our teeth into a delicious chocolate cheesecake. Then, we walked back to our hotel & fell asleep as soon as we got into our beds.

Today was our last day at Hawai'i. In just a few hours, we would be flying back to San Jose. Isha & I spent our last 30 minutes in our hotel by playing in our swimming pool. Then we took a bath & drove to the Honolulu International Airport. At the airport, we ate pizza for lunch.My mom & I played a card game. When our gate number-gate number21-was called, I led my & Isha to the correct gate. We sat down for a pretty long time until the airplane finally came. All of the people scrambled around the plane until they found their numbered seats. Our family's seat number was 40. We found it pretty quickly & sat down. We spent 5 & a half hours in the airplane until we finally landed at the San Jose International Airport. We got our luggages. Then, Reva, my friend, picked us up from the airport. She had a Christmas present for both Isha & me. I reminded Isha that tomorrow would be Christmas! So when we got home we set up milk & cookies. It's good to be back home, I thought. We got into our beds. "Short day," I said to Isha. "Yeah," she replied. Then, we fell asleep.

Model Portfolio

Based on my not so good track record of 2006 returns on my stock picks, I decided to design a portfolio with a mix of stocks, many mutual funds and for first time mix of bond and cash. (yesterday when we were playing bridge, one of our buddy mentioned that his portfolio returned 60% - congratulations to him on this excellent record. I would be interested if he can repeat and sustain similar results with large amounts - say 100K)

On Friday when Yash had gone to singning class, I designed this model portfolio based on closing prices of Jan 5, 2007. My goal is to beat S&P by at least 2% by Jan5, 2008. I promise to update the blog with quarterly results on this portfolio.

(Diclaimer: I personally don't have 100K to invest in such a portfolio. This is just to test application of some of the learnings I am getting in my MBA classes)

Symbol	Shrs	Holdings Value	Name
-	5-Jan-07	28.47	527	15,003.69$15,003.69	CSCO	527	15,003.69$15,003.69	CISCO SYS INC
-	5-Jan-07	27.74	180	4,993.20$4,993.20	YHOO	180	4,993.20$4,993.20	YAHOO INC
-	5-Jan-07	129.82	77	9,996.14$9,996.14	VFINX	77	9,996.14$9,996.14	VANGUARD INDEX TRUST 500 INDEX
-	5-Jan-07	25.21	198	4,991.58$4,991.58	VGSIX	198	4,991.58$4,991.58	VANGUARD SPECIALIZED PORT INC.
-	5-Jan-07	62.69	80	5,015.20$5,015.20	FSESX	80	5,015.20$5,015.20	FIDELITY SELECT ENERGY SERVICES
-	5-Jan-07	20.31	492	9,992.52$9,992.52	VSTCX	492	9,992.52$9,992.52	VANGUARD STRATEGIC SMALL CAP EQ
-	5-Jan-07	17.46	573	10,004.58$10,004.58	VGTSX	573	10,004.58$10,004.58	VANGUARD TOTAL INTERNATIONAL ST
-	5-Jan-07	12.46	803	10,005.38$10,005.38	VDMIX	803	10,005.38$10,005.38	VANGUARD DEVELOPED MARKETS INDE
-	5-Jan-07	23.68	211	4,996.48$4,996.48	VEIEX	211	4,996.48$4,996.48	VANGUARD EMERGING MARKETS STOCK
-	5-Jan-07	32.09	156	5,006.04$5,006.04	UUPIX	156	5,006.04$5,006.04	ULTRAEMERGING MARKETS PROFUND I
-	5-Jan-07	105.95	47	4,979.65$4,979.65	FXI	47	4,979.65$4,979.65	ISHARES TR FTSE INDX
-	5-Jan-07	12.61	397	5,006.17$5,006.17	TABRX	397	5,006.17$5,006.17	TEMPLETON BRIC FUND CLASS A
-	5-Jan-07	6.22	804	5,000.88$5,000.88	VWEHX	804	5,000.88$5,000.88	VANGUARD HIGH YIELD CORPORATE F
-	5-Jan-07	-	5,000.00	$5,000.005,000.00	$$CASH	5,000.00	$5,000.005,000.00
-	-	-	-	99,991.51$99,991.51	Total (USD):	-	99,991.51$99,991.51

Happy New Year 2007 !

I have been wanting to write blog for some time but life got busy with kids, MBA, work and Hawaii vacation. Finally taking the opportunity of new year 2007, I decided to write up my thoughts.
Reader beware - it's just free-flow of my thoughts spanning from my recent reading, movies and some investment ideas.

First of all, Happy new year to all folks who happen to come across this post !

Last week saw quite a few movies like "The Night At Musuem", "The Good Shephard" in theatres and saw "The Inconvinent Thruth: Global Warming" and "World Trade Center" on DVD. I liked all 4 movies - they were covering completely different topics but I happen to like all of them. I liked acting of Matt Daemon in Shephard, family friendly comedy of Museum and the presentation of global warming problem by Al Gore in Inconvenient Truth. This really opened my eyes and I am glad I saw it with my son Yash. Not only do we need to educate our generation and act on it but also educate next generation if we want to sa ve Planet Earth for all of human kind for years to come. For more details, check out
I definately recommend all 4 movies.

Did not get chance to read up too many books. Have been reading " The Preseident's Men" covering Nixon's watergate investigations by Washington Post journalists.

How did my stock picks did in 2006 - not very good. When S&P returned 13.6% for 2006, my picks combined were just break-even. Hope to do better this year. After seeing the performance of my recommendation vs my actual investments in mutual funds, I am strong beleiver in picking right mutual funds and let it ride the market. After I discussed few ideas with one of my friend Milind Kulkarni, here are my recommendations on target distribution for 2007.

Target Distribution	Target %		Recommendations	Comments
Stocks
ESPP	15%		Your company stock	Company stock
Individual Stocks	5%		YHOO, F, AAPL, PFE	Yahoo, Ford and Apple and Pfizer
Domestic Mutual Funds	30%
Large cap		10%	VFINX	S&P Index
Sector		10%	VGSIX, FSESX or FSHCX	Real Estate, Healthcare or oil service
Small-cap		10%	VSTCX	Vanguard strategic equity
International Mutual Funds	40%
Global		20%	VGTSX and VDMIX	Total International and developed market
Emerging		20%	VEIEX or UUPIX, MCHFX or TABRX	Emerging fund and BRIC or china fund
Bonds	5%		VWEHX	Corp bond fund
Short-term CD + Cash	5%		Cash is king:-)
Total	100%

As seen from above distribution, nearly 85% distribution is in MF. I beleive this distribution would beat S&P by about 2-3% next year.

Bye for now and enjoy 2007!

Lage Raho Munnabhai

Much awaited part II of Munnabhai movie came in this weekend. We went to see the movie w/ Milind and Prashant's families. We went for 7 pm show to Naz theatres but it was sold out and we got tickets for 9 pm show. Overall the movie was excellent - after long time some good Hindi movie worth writing has come up. The dialogues, script was funny and it also achieved delivering some social message - basically the values about Gandiji's techings which all of us Indians have forgotten. The duo of Sanjay Dutt and Warsi had a great chemistry. I would definately recommend seeing this movie even if you are not a fan of Hindi Movies like me.

Labor day weekend is good break for me before I fully get into my MBA studies...Yash had a Bhajan singing program in cultural activities in Ganeshotsav program. Yash's singning has been improving. He has started singning Mitwa song pretty well.

Read about Coke+Mentos fountain. Yash wanted to try it out. The concept works but fountain was not a great success.

There are quite a few good coke+mentos fountain. I particularly liked this one:

Coke+Mentos Fountain

Yash's various styles of Boom Chika Boom

Everyone is talking about YouTube and within few months it has become "the" company - similar to Myspace. I thought let me check out it - especially when "OK GO" song video which was uploaded on YouTube few days back came on VH1 Top 20 Countdown

Myself and Yash decided to give it a try by creating our own video and upload it on YouTube. Check it out and please rate it:

Yash's Boom Chika Boom

Call options on long-term holdings

We were discussing on how to get steady income from stocks which one is owning for long-term and do not plan to sell anytime soon. Basically lot of us own stocks through ESPP or boughts stocks which we are not planning to sell due to company's long-term prospects. e.g. I have bought some EBAY when in was in mid thirties and not plan to sell anytime soon - one because it is in mid-20's and other reason is that I believe it will go back to low 40's in 18 month. However just holding the stock is not doing any good to my return.

Basically here is how it works in layman's term:

If you have 100 shares of of a stock say EBAY (which is selling at $ 27.15). If you are willing to sell the stock in one month if it goes to say 30 (about 10 % return in one month). Just sell a covered call option for Sept 30 which would net you about $ 30 before commission (about $ 21 after commission). If stock goes about 30, you may have to sell stock at 30 giving you 10 % return in one month. If stock stays below $ 30 before 3rd Saturday on Sept, you keep the change of $ 21 giving you about 1% return on your investment of $ 2700 (for 100 shares). You keep on doing this every month and collecting about 1 % every month effectively giving you nearly 10% return per year - much better than treasury:-)
To reduce trading charges, one can repeat same strategy every two months. So what's the downside (there is no free lunch!) ? If stock moves up substantially above $ 30 due to any event, you would miss out on upside potential.

In general, I found this strategy reasonable for all long-term holdings and I am planning to try it out on couple of stocks.

Now turning to some events:

Last week we went for camping to Napa State Park - it was fun camping. Kids enjoyed a lot playing in small river stream behind our campsite and also playing water balloons. We visited few new wineries nearby - St Joseph, Rutherford Hill, Peju and so on. It was fun, relaxing weekend.

This is last weekend before my second year of MBA starts - it was good summer break and I am definately all ready for going back to School !

Five point someone

Over the weekend, I just completed a nice read of "Five point someone" written by Chetan Bhagat, 1995 IIT graduate from IIT Delhi. It is nice read about student life in IIT which is applicable to student life in any engg college in India. Some folks take it as 4 years of mugging and some folks go to extreme of just getting by enough grades to get a degree. The book was more about "what not do in IIT". It reminded me of my days at IIT Kanpur even though they were much different than what is mentioned in the book. It's nice read on sunny afternoon@beach.

My next read is more serious: The end of faith by Sam Harris. So relavent to current events around the world with Israel/Hezbollah conflict, bombings in Mumbai, US war in Iraq and nuclear standoff with Iran. I have my own opinions but that's for later writing.

Myspace has selected Google as ad provider. Great win for Google considering MySpace traffic is going gang-buster and that's more sticky than anything around. Hope it gets Google stock moving again.

Sandisk buys M-Flash Systems

Finally the rumors of Sandisk buying M-flash became real - it's good that I did not sold few shares I had in M-flash. I think it makes a great deal since Sandisk buys a good company (except some stock options enquiry) with excellent technology in a growing market and at the same time gets access to critical patents and royalty income stream.

Looks like the pace of consolidation in technology industry is gaining quite a bit of momentum. The article in WSJ on technology industry matruing was really good. Basically it says that technology industry has become matured and has already grown as much it can. Extending this logic, I beleive that market valuations in technology industry is not going to grow to 1999-2000 levels ever (tech industy accounted for 34% of S&P 500 valuation in 2000 - now it's 14-15 %). Maarket would move the valuations from one tech company to another company. e.g. Most of networking industry valuation is concentrating in Cisco whereas some of the internet company valuation is moving from Yahoo, Ebay, Amazon (and to some extent from Microsoft) to Google. Dell's valuation is moving to Apple and Intel's valuation is moving to AMD and SanDisk. So investing in technology in general is not going to be profitable unless one identifies which companies are going to capture market valuations from current leaders and invest in them.

We EWMBA weekend cohort had a get-together at Sateesh's place. Considering it was on Saturday night in summermonth, quite a few folks showed up. It was good to get in sync with what folks were doing in summer months and get ready to go back to school in a month!

Should Intel buy Nvidia

After a long break I am writing on my blog - I was off to India for my vacation and before that was too busy in finishing first year of MBA. Now that I have off from MBA@Berkeley, I can spend some time in writing up some stuff.

Today AMD bought ATI technologies and that brought me to think - should Intel buy Nvidia. I think it will fit very nicely. First of all, Intel, unlike AMD can digest acquisition like Nvidia even if they paid about $8B (for about $ 23 per share). It would get Intel into graphics chip market which is grwoing faster than Intel's own business and fits well with it's focus on PC business (unlike its communication business). After AMD/ATI deal, Nvidia is also last pure playin this space. All other parameters like P/E, P/S ratios are comparable and even lower than Intel. Last but not least, it's right across the road from Intel head-quarters in Silicon Valley.

Continuing on the theme of in-organic grwoth, I do believe that SanDisk should buy M-systems to expand its market (there is rumor on this and as dis-claimer, I do own little bit of M-systems) since flash market seems to be as hot as California summer!

Internet II: Video and Voice

I am not sure if I am qualified to write what title suggests but let me wtite few lines anyway. Reading the annoucements coming out of CES at Las Vegas and reactions various internet companies were getting from Stock Market, it was almost feeling like 2000. Google going up by 20 bucks, EBAY and Yahoo making their own movements. So what are the main significant annoceuments and how it may change the landscape:

1) Skype going everywhere: This is one of the most significant development happening. I did not think it would happen so quickly. Now you can get a skype-enabled phone which you can use in wi-fi hotspots to make free calls. So technically when cities like SFO becomes wi-fi cities, you don't need regula phones at all ! This is far fetched but still reality is very close. In my opinion, all telcos need to watch out this fast changing development very carefully and move aggresively to play a role in that. EBAY made a very smart move by getting Skype even though it was completely different business model than its own.

2) Video-on-demand is finally coming (after 10 years). Folks used to talk about VOD in 1995 and then people became frustated with quality and choices available. But with Apple iPOD video, $ 1.99 per episode on itunes and now Google announcement of video download is making Video-on-demand reality. Many of these are still tied to laptop, ipod or cell-phones. But by next year, it is possible to download this on TiVOs and play on TV. Good for Cisco due to increased BW.
Regarding Google getting into this market:

Financially just Video-download revenue will not be big revenue and profit maker for Google. However for any search, folks go to Google. It wants to keep that lead for videos also. So if I want to buy an episode of Seinfed, they want me to go to Google Video instead of itues and create indirect traffic to their search site. It is a smart move for Google and I think market is recognizing it

3) Third major but subtle development is flash everywhere. Every device like cell-phone, ipod, digital cameras would have a flash - not to count USB storage cards. No wonder SanDisk (SNDK) is riding high since there are still not too many players and at least for 12-18 months, even with additional supply coming from Intel/Micron joint venture, there would not be glut. I would not be surprised if SNDK hits $ 100 by 2006 year-end !

4) CES is becoming more exciting than COMDEX ! That means there is more action in consumer devices than computers/laptops.

Good night and have a good weekend!

/Shyam

Sample Portfolio :2006

As continuation of my predictions for 2006, I thought let me create a sample tracking portfolio with timeline of 1 year and see how it performs. Since I do not have spare $50K to invest, best way to test my analysis of some of these stocks is to actual create paper portfolio and track it for its performance.

I created this on Jan 3 morning so I assumed Dec 30 closing prices for buy.

Symbol Shares Price Comm Amount Notes
RIGL 200 8.10 10.00 1,630.00 Fallen Pharma company
SIFY 500 10.76 10.00 5,390.00 India + Internet, what else you need ?
PALM 200 31.75 10.00 6,360.00 Treo700 + RIMM woes
EBAY 200 43.43 10.00 8,696.00 Auction growth + Skype
CKCM 500 21.00 10.00 10,510.00 RFID play
BBI 1,000 3.75 10.00 3,760.00 This is not going BK so it would recover
ELN 1,000 13.90 10.00 13,910.00 Tyasbari returning to market in Apr06

Total paper money invested: $ 50256

My target for this paper portfolio is to return 15%. Let's see how it does in 2006 !

/Shyam

Predictions 2006

Since this is first time I am writing blog on a new year eve and I am kind of fond of predicting some of the stock actions, I thought let me put it in writing so I can evaluate if they were on target or not. Some of these may be obvious but nonetheless let me put them in writing. I am willing to take bets (Bhandi - are you up for it:-)

Top 5 stock predictions:

Google: Google hitting $ 500 (pre-split)in next 6 months (before 7/1/06), gets included in S&P and gets split
PALM: Will hit $ 40 by year-end
Apple: Will split 2:1 and hit $ 42 after split ($ 84 before split)
EBAY: Will cross $ 50 in next 9 months (before 10/1/06)
Click Commerce (CKCM): An RFID vendor will cross $ 30 (currently at $ 21)

Mutual Funds:
- Japan and Korea based mutual funds continue to do well. Watch out for Profunds Ultra Japan and fidelity Korea funds
- Health care industry would continue to return decent returns

Indian stocks:
- BSE index will cross 10500 by year end
- Aptech will touch 200 in one year (currently at 138)
- Apollo Hostpitals will reach 625 in one year (currently at 490). Medical tourism will start gaining major traction and since Apollo is best positioned in this space will start getting noticed
- Hexaware Technologies will reach 180 by year end (currently at 130)

Trends in Politics:
- By year end, Hillay will start giving indications about being candidate for 2008 presidential election
- John McCain's candidacy on Republican ticket will start getting momentum
- No major changes in Indian Politics other than BJP trying to stay relavent by creating some new about internal party politics

Personal resolutions:
- Excersize at least 2 days a week (just a simple jog in morning)
- Other resolutions are too private to list them here:-)

Happy new year !

Shyam

This was first cal game we went. Yash, Mark are having good time during half-time. It was fun to watch first college football game. Now that I am cal student, I have started taking interest in college football and it is pretty interesting. I just saw Adam Sandler's The Biggest Yard - good entertaining movie.

Today my second half of Fall semester started with accounting and and markting classes in EWMBA. Both pref are pretty good and keep discussion interesting. Accounting prof Suneel is good at making fun of accountants and keep a subject like acct interesring. Markteing is whole new area for me so understanding those concepts are useful. Good thing is there is no mid or final term exam even though project sounds scary...but hey you can't learn just by reading books. So for now I am enjoying and learning my MBA.

Looks like Apple stock has already paid for my "nano". Friday was the day for Google. I should have done some more study and bought Oct 220 options which were selling at $ 2 on Thursday and closed $ 19 on Friday for a cool 850 % gain. I need to keep an eye on Google options just before next quarter results.

After my OB class, I just ordered Jack Welch's Winning book. Need to find some time to read it.

Good night !

iPOD

I have been monitoring Apple stock for quite some time and I have always admired Apple as a great innovator in computing and now music players and great marketer. I got excited by their introduction of ipod nano and went with my son Yash to check it out in Apple Store in Valler Fair Mall.
It was so cool and neat that Yash wanted to buy it immediately. I mentioned to him that we will buy over Christmas and started thinking how can I use this cool nano.

I started a competition on my group on whoever fixes most defects from Sept to Dec05 timeframe would get a ipod nano. We call it as "nano" race. And the group got really excited about this race and I am seeing about 30-40% increase in defect fix rate than normal conventional times. My conclusion is that folks get motivated more by public recognition and competative spirit of race.

Now coming to nano for myself or Yash, I decided that I will buy nano only with money made on Apple. So I went and bought 100 shares of Apple at around 52. I hope to buy nano (or new video enabled iPOD) with gains from this and my guess is Apple stock would touch 60 by Christmas timeframe giving me enough gains to but one of these ipods myself

MBA update:
Just completed final for MicroEnconomics yesterday and OB presentation. Final went so-so since I made some silly mistakes. OB presentation went ok. My MBA course is almost 10 % complete. Next week two courses: Marketing and Accounting are starting. It would be interesting

EWMBA

Finally my EWMBA as Haas has started on 8/20 with first day at Berkeley campus. First day was pretty good - it was like having 6 day work-week. The jorney till now was started last year around Dec time when I decided to pursue my MBA and started preparing for application. After GMTA, Tofel, Essays, Reco, Admission, waiting for confirmation for admission, stats pre-req course completion and attending Haas Orientation in first week of Aug - it was already a long journey and since I survived this, I am sure that I would survive first year in which we have to complete 9 courses and total 3 years to complete my MBA.

First half of first semester has two courses - one on Micro-economics and other on Organization Behaviour. Both are interesting courses and should be directly applicable to my job to some extent. Instrcutors are good.
Home-work and studies have started with reading of case-studies and problem set solutions. Before it starts with full speed, I went for a round of bridge with Bhandi, Rahul K and Manoj Wadekar. Not sure when I would be able to play again !

Now coming to some stock opinions:

India:

Anil Ambani has investred in Span Telesystems which is involved in call-center and other telecommunications related out-sourcing activities. From experience with Adlabs and Reliance Capital, the share prices in which Anil Ambani invests zooms in next few weeks. Span Tele has already went from 25 to 150 today. I think it is good indication to invest. In my opinion, this stock will cross 200 by 2005 year end for 25 % return - not bad for 5 months return.

For US stocks, I am tracking LOUD and PALM which I think have quite potential. LOUD is kind of arms-dealer enabling many non-tech companies and even MSN to open up Music stores for song downloads. It is around 90 cents and should go above 1.2/1.3 by year end.
PALM's Treo line of PDA cum cell-phone is very strong competition to RIMM and from market value point of view, PALM is cheap compared to RIMM. I am surprised that either Nokia or Apple is not making a bid for PALM. In my opinion, it should cross 40 (from current 33) by year end.

Other opinions in next post..Good night !