Moving Ideas
Stockings
Dec 172012

Ho Ho Ho

It’s almost a wrap on 2012 and while some are counting the days to the “Fiscal Cliff” or to “Bowl Games,” we’re getting excited about Christmas and what might be under the tree.

While we’d love to give all of our loyal readers a new iPad Mini, we can’t because they are perpetually sold out. We then thought giving everybody a premium gift subscription to Spotify would be cool, but then our research showed us that basically everybody has become a member of Spotify in the past couple of years.

For those that don’t already have Dropbox, certainly giving an invitation to open an account would be appreciated as the service works like magic. We then came to our senses and realized that Dropbox basically creates dependency and we don’t need to be accused of creating addicts (although we love businesses that are additive without causing cancer). Disclosure: GSV owns (long) Apple, Spotify and Dropbox.

Alas, as much as we’d love to be original, the process of elimination forces us to go back to tradition. Accordingly, our gift to A 2 Apple readers is our annual “Stock Stocking Stuffers” and also a few “shorts” to provide some “coal” for the naughty ones.

We have a very robust list this year as there are a number of great companies that are selling at “gift” prices. For our “nice” loyalist:

For our naughty readers, or for our nice readers who like to short stocks, here is some “coal:”

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Last week, stocks were like ducks on top of the water where everything looks calm but below the surface they are paddling furiously to stay afloat… For the week, the Dow was essentially flat, the NASDAQ was down 0.2% and the S&P 500 was down 0.3%. Part of the drag on the Market was its largest Market Cap company, Apple, off 4% again last week and hitting a 10-month low.

What’s interesting is that while pundits are proclaiming the “Bull Market” dead, I’m not sure many of us even knew it was alive. So from a March 9th, 2009 bottom, the S&P 500 has risen 109% which sounds like a Bull Market, it really is just a rebound from when stocks fell of the cliff the year before.

Additionally, in extended Bull Markets, valuations tend to be high from a historic standpoint and compared to bonds and other asset classes. Currently, the P/E on the S&P 500 is 13.6x on 2013 earnings, versus a historic average of approximately 16x.   With the 10-year Treasury at 1.71%, the “Bond P/E” is 58.5x, making stocks a bargain basement steal comparatively.

Moreover, in Bull Markets that are at risk of a correction, other warning signals like a frothy IPO Market or individuals and foreign institutions piling in are present… no such activity today.

We continue to focus on individual stocks which have strong growth and sell at reasonable prices.  As our Christmas list shows, we have numerous opportunities to achieve our objective.

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Bubblin…
From Luben

Last week’s Venture Summit Silicon Valley in Half Moon Bay had some impressive speakers and panels, all focused on trends in Innovation.

Jay Samit, founder and CEO of ooVoo (which offers video chat for up to 12 people), gave some interesting insights on online entertainment. When looking at what Instagram has done in the past two years, he mentioned that the majority of pictures taken in human history were done in the last 24 months alone! Looking at how the music industry has shifted, YouTube is now what used to be MTV 15 years ago, with 40% of YouTube videos being music clips. Also, the young generation is shifting away from traditional TV, with the second screen (the iPad) taking over the first screen (the TV). Jay also mentioned that he is very bullish on LinkedIn as he believes it has the potential to become the new Bloomberg terminal — LinkedIn has the best intelligence on who is hiring&firing and what are current trends in businesses and in the overall economy.

Other interesting takeaways from VSSV include:

  • Twitter is now the only real-time information source during global events (Hurricane Sandy for example)
  • Digital natives switch 27 times between screens per hour… screens meaning phone, tablet, TV, PC; Tapad is a mobile ad cross platform that aims to capture this trend and to provide the optimal solution for advertisers.
  • The WhaleShark app let users find the best coupon offers in U.S. malls for Black Friday and did 2% of all U.S. sales that day.

  • Last week our GSV team had a very productive brain storming session on what will be the new leading themes for the coming years. Here is what we came up with:

    Besides our key themes we’ve had for the past 2 years, which were Social Mobile, Cloud Computing, Internet Commerce, Sustainability, and Education Technology, we looked at where things are shifting to and what could be some new themes in 2015.

    Some key comments on each one of those:

  • AI — artificial intelligence is still far away to become main stream but we certainly see this up and coming. Self driving cars is a good example and Google is likely to be the one on the front seat
  • Yield Management looks at companies disrupting traditional banking services. LendingClub is a great example as it offers superior returns at ~10% annually compared to traditional banking products ranging between 0.5% (CDs) to 3.2% (Investment Grade Corporate Bonds); U.K. based TransferWise disrupts the foreign exchange market by changing currencies for a ~0.3% fee versus the 3% fees charged by banks
  • The Twitter Theme is about Twitter becoming so dominant that companies create products using its platform…similar to Apple and Facebook
  • Voice Search is what Siri is starting to do but is just in its infancy; Google could be potentially huge
  • Mobile Payments is a global theme and is already skyrocketing with Square, iZettle, SumUp being at the forefront
  • Big Brother is Watching You is a trend that is starting to gain a lot of traction; looking at what Facebook is doing with facial recognition, Google Earth with tracking, Totus Solutions with its street lights, and many other small startups that are focusing on security, all this was already part of George Orwell’s bestseller 1984
  • Transport apps à la Uber, SilverCar and HailO have started a services that could easily overtake traditional taxi and car renting services
  • Renting versus Owning is a theme looking how the young generation is all about renting things — whether it’s lodging (AirBnB), dressing (Rent The Runway), or car driving (SilverCar, ZipCar)
  • Just For Me Media filters the best and most relevant information floating the web; Twitter and Facebook are definitely on the forefront, but other companies such as Flipboard, AlwaysOn and Ozy Media could also become leaders in the near future
  • Internet of Things looks at floating drones used by the army (and soon in cities), home solutions such as Control4 or Nest, and self driving cars like the Google cars
  • Smart Cities will be inevitable as population growth and resources constraints are creating enormous problems that need to be tackled now
  • Wearable Technology is what the iPhone started 5 years ago, what the Nike+ Fuelband and Jawbone’s Up are today, and what Google’s Glasses could bring in the coming years

  • We are highly focused on each of these themes/potential themes and are looking to identify what will be the ultimate leaders in each one of these categories

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