The Innovation Index steadied after the monster third quarter in 2007. The Innovation Index dropped 3% after the third quarter, and has now gained 53% for the year. The Innovation Index has already quadrupled the 2006 performance, and we still have a half quarter to go. Is there a Holiday rally this year? Could this be another banner year for The Innovation Index? The Innovation Index easily crushes the major U.S. indices including the S & P 500, NASDAQ and Dow Jones. S & P 500 dropped 5% after the third quarter, and is now up only 2% for the year; NASDAQ shed 3% after the third quarter, and is up to single-digit gains at 8% for the year; the Dow Jones Index dropped the most - 6%, and is up 5% for the year.
The Innovation Index closed at 99.80 on November 15, 2007, down 3% from the closing price of 101.39 on Sep 28, 2007, and up 53% from the closing price of 65.05 on December 29, 2006.
Mid-Quarter Leaders
Microsoft Corporation (NASDAQ: MSFT) is the leader mid-quarter at 15% gains, up 13% for the year. Google Inc. (NASDAQ: GOOG) is next at 11% increase mid-quarter, and up by a good 37% for the year. Apple Inc. (NASDAQ: AAPL) added another 7% mid-quarter, and is up a huge 94% for the year. Only 3 more Innovators have gains mid quarter - Wal-Mart Stores, Inc. (NYSE: WMT) with gains of 6%, although flat for the year; Research In Motion Limited (NASDAQ: RIMM) continued the bull run with another 5% gain, leading all innovators with 142%, and The Proctor & Gamble Company (NYSE: PG) added 2%, with a respectable 12% for the year.
Mid-Quarter Laggards
It has been a tough quarter so far for many innovators and the market at large. Six innovators have double-digit losses mid-quarter. 3M Company (NYSE: MMM) with 15% loss for the quarter and up only 3% for the year, Amazon.com, Inc. (NASDAQ: AMZN) down 16% for the quarter although up a huge 97% for the year, Cisco Systems, Inc. (NASDAQ: CSCO) giving up 12% for the quarter and up 7% for the year, eBay Inc. (NASDAQ: EBAY) dropping a huge 18% however staying positive at 7% for the year, International Business Machines Corp. (NYSE: IBM) shedding 12% during the quarter and staying at 7% also, and Target Corp. (NYSE: TGT) tumbling 13% during the quarter and down 3% for the year. Tough indeed. The good news is that most of the innovators are still in positive ground and with a good year-end holiday rally, they could be all going happy along with their investors.
Yearly Leaders and Laggards
Who sits on the top of The Innovation Index? There is a change in the top position. Research In Motion Limited - (NASDAQ: RIMM) is the leader of the pack at 142% gains for the year. Amazon.com, Inc. (NASDAQ: AMZN) is next with 97% gains for the year. Apple Inc. (NASDAQ: AAPL) is next up with 94% appreciation for the year. There are six other innovators with double-digit gains for the year.
Only three innovators are in the negative territory. Starbucks Corporation (NASDAQ: SBUX) is the significant decliner, down 32% for the year. Southwest Airlines Co. (NYSE: LUV) has lost 8% for the year. Finally, Target Corp. (NYSE: TGT) is down 3% for the year.
Year End Predictions
Where will The Innovation Index end up when all is said and done? Is there a rally in store for the broader market that will only boost The Innovation Index? We project The Innovation Index to close over 65% for the year, gaining over 12% for the remainder of the year. The consumers will resume their buying beginning next week, speed up during the Thanksgiving weekend, and shop till they drop in December. This year the consumers are waiting for a bit of good news and a warm, fuzzy feeling before the holidays. This will happen, although will happen later than the usual shopping period. Sure the retailers will need to lure the shoppers with more specials and higher discounts; however, once the shoppers begin to return, they will in turn bring in more shoppers. If the weather stays unusually warm though, ironically, it could negatively impact the stock market and The Innovation Index.
The Innovation Index Reports:
Top 50 Innovative Companies in the world - 2007 Report on Top 50 Companies
Annual Report - Chapter One - Total Innovation Activity - 2006 Annual Report One
Annual Report - Chapter Two - The Top Innovator - 2006 Annual Report Two
Annual Report - Chapter Three - The Innovation Insights - 2006 Annual Report Insights
Innovation and Stock Performance Correlation - The Innovation Index and Stock Performance
The Innovation Index gallops to 56% - Quarterly Report - Q3, 2007
The Innovation Index gains 3% during the first quarter - Quarterly Report - Q1, 2007
About The Innovation Index
The Innovation Index introduced in December 2006 is a weighted stock price index of the top 20 Innovators in North America.
The Innovation Index has returned 119% over the last five years. This assumes an investment in each stock of The Innovation Index (buying each stock). An average of $100 invested in The Innovation Index on December 31, 2001 returned $219 as of December 29, 2006. By comparison, $100 invested in each of S & P 500, NASDAQ and Dow Jones Index returned $124. The Innovation Index beats the S & P 500, NASDAQ and Dow Jones Index by 77% over the last five years.
The Normalized Innovation Index has returned an impressive 174% over the last five years. This assumes equal investment in each stock of The Innovation Index as of December 31, 2001.
Alphabetical list of the top 20 Innovators of The Innovation Index and their stock ticker symbols:
3M Company - (NYSE: MMM)
Amazon.com, Inc. - (NASDAQ: AMZN)
America Movil - (NYSE: AMX)
Apple Inc. - (NASDAQ: AAPL)
Cisco Systems, Inc. - (NASDAQ: CSCO)
Dell Inc. - (NASDAQ: DELL)
eBay Inc. - (NASDAQ: EBAY)
General Electric Co. - (NYSE: GE)
Google Inc. - (NASDAQ: GOOG)
Hewlett-Packard Co. - (NYSE: HPQ)
Intel Corporation - (NYSE: INTC)
International Business Machines Corp. - (NYSE: IBM)
Microsoft Corporation - (NASDAQ: MSFT)
Research In Motion Limited - (NASDAQ: RIMM)
Southwest Airlines Co. - (NYSE: LUV)
Starbucks Corporation - (NASDAQ: SBUX)
Target Corp. - (NYSE: TGT)
The Proctor & Gamble Company - (NYSE: PG)
Wal-Mart Stores, Inc. - (NYSE: WMT)
Yahoo! Inc. - (NASDAQ: YHOO)
The Innovation Index will analyze the positions and standings of the top 20 Innovators at the end of each year. For 2007, there will be no further changes in The Innovation Index.
Disclaimer: I invest in the stocks comprising The Innovation Index.
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