Smart Investing In Tough Economic Times

How do you invest in the stock market during a recession, and still make money? Especially, when the economy is stalling, inflation keeps growing, oil prices sky-rocketing, unemployment rising, and housing market collapsing - how do you keep an even keel, and go about doing business as usual while your investment portfolio may be sinking 10% to 20%, or worse?

One answer: Smart Investing!

Say you are buying a new car, new house, or a new business - what is the first question most people ask? How much does it cost? When it comes to car buying though, it frequently becomes a highly emotional decision - the buyer is not thinking of resale value, operating costs, and profits. Rather, how much fun would it be to drive this car, what would my friends say about it, and can I impress my girlfriend, boyfriend or someone special with it? Nowadays, another big question has entered the equation: mileage. How many miles for a gallon of gas? How many times you ask yourself this question when buying a car: Can I make a profit from buying the car? Just go ask the buyers of hot hybrids who were able to buy them at retail, and are making a tidy profit from selling them.

What about buying real estate? Either a primary home, secondary home, rental property, commercial or multi-unit? Again, cost is still the number one question - the down payment required to purchase the property. However, the home has to be appealing and elevating (to your senses) - especially the primary home. How many times have you bought a home that looked downright ugly? Perhaps never. Unless you are an expert in turnarounds, and are buying a cheap unit, can make it look pretty, and make a profit from it. With real estate, besides the cost, "affordability" becomes a real issue because most real-estate buys are in the hundreds of thousands, millions or even more. Can I afford this piece of real-estate? Do I have enough money to make a down payment, and then enough to make a monthly mortgage? Would the bank approve the loan? If this is my primary home, can I live happily for the next umpteen years without having to worry about mortgage? Again, the question on whether I would make a profit from my primary home is secondary. If you are buying an investment property, profits and cash flow are quite important. How soon can I recoup my down payment is another question that investors of real estate properties always think about. And the ability to create a monthly income through positive cash flow is relevant. Finally, how long do I hold this property before I can sell it for a profit - the time value of my investment and the potential returns thereof.

What about buying a business? Besides costs, profits, and cash flow, questions such as revenue, gross margins, operating costs, revenue growth, inventory, liabilities and debts enter into the equation. Now, one has to think about the management and people - who is running the show, and the ability to retain key talent after the acquisition. What about the products that the business sells, competition, customers, current market, and market opportunity? Is the market for this business growing or retreating? Is this business one of the top players, a second-rate player or a startup? What is the overall health of this business? What is the future outlook? All these questions must be answered before you buy a new business. And based on a thorough analysis, you make the decision to purchase - or not. Buying a business is perhaps the most important decision of anyone's professional career. If you make a good decision, you can profit from it; a bad decision, and you can lose all your capital. Your ability to manage and grow the business is also critical.

What does all this have to do with buying stocks and stock investing?

Purchasing stocks of a company, mutual funds, ETFs, or any stock investment for that matter should be the hardest decision you ever make - even harder than buying a car, buying a house, or buying a business. But the reality is - well we all the know the reality of investing in the stock market. We get a hot tip from a friend, a recommendation from a broker, see a particular stock running up, get influenced by an investor newsletter, read an investor journal, watch Jim Cramer's Mad Money or another investment show on TV - and we buy the stocks of a particular company, and invest our hard earned money. And wait. And wait. And wait. Wait for the stock to run up. To go up by 10%, 20% or more. But it does not. It actually drops in value. Now what do you do? Either sell out, or buy some more. All along you have not taken the time to understand the business whose stocks you have bought. Instead, you are just focused on making money somehow. And now you are emotionally attached to the stocks you have purchased. So you buy more stock at lowered value. And wait again. And wait some more. And the stock goes down further. Has this happened to you? Ultimately, you sell the stock for a huge loss, or just hold on to it, and see it drop further and further. Finally, you stop looking. If you got lucky though, you do end up making some money the first time. But the luck does run out eventually.

Smart Investing In Tough Economic Times

When the going gets tough, the tough gets going. Wish that was true for the stock market. Here is a quote from Benjamin Graham, considered by many as the father of investing, that everyone must live by if you ever consider investing in the stock market:

"An investment operation is one which, upon thorough analysis, promises safety of principal and a satisfactory return. Operations not meeting these requirements are speculative" - Benjamin Graham

Actually, what Graham says is true for any investment. You always want to make sure your invested capital, the principal, is safe - you want to minimize risk as much as you can. How do you do this? By doing a "thorough analysis" of the operation. And on top of that, you want to produce a healthy return from your investment that makes you happy. But Graham goes one step further by proclaiming that any investment that does not follow these two simple rules are speculative.

Warren Buffett, the most prolific investor of our times, and a student of Graham, has offered these simple tenets before purchasing a stock and investing in a particular business:

Business Tenets

1. Is the business simple and understandable?
2. Does the business have a consistent operating history?
3. Does the business have favorable long-term prospects?
   

Management Tenets

1. Is management rational?
2. Is management candid with its shareholders?
3. Does management resist the institutional imperative?
   

Financial Tenets

1. What is the return on equity?
2. What are the company's "owner earnings"?
3. What are the profit margins?
4. Has the company created at least one dollar of market value for every dollar retained?
   

Value Tenets

1. What is the value of the company?
2. Can it be purchased at a significant discount to its value?

(reference: The Warren Buffet Way)

Only after you get a satisfactory answer to each of the above questions should you consider investing into the stock of a particular company. Now you realize why investing into the stocks takes a lot of planning and research - the "thorough analysis" that Graham alluded to. For instance, under the Management Tenet, the question on whether "management resists the institutional imperative" has to do with management's focus: on the business, or managing the investors.

Innovation Index Group thoroughly analyzes the Top Innovators in North America, and only reports on those that show the highest potential for growth and minimize the risk to the principal.

Here is how Innovation Index Group determines the best companies:

Selection Methodology

The Innovators in The Innovation Index are determined using intensive factual research and analysis, leveraging the following resources:

1. Rankings of world’s top innovative companies as published by BusinessWeek and Boston Consulting Group

2. Rankings of the top Innovators as published by Forbes, Fortune and other business publications

3. Analysis of revenue, earnings, cash flow and management performance

4. Assessment of the tangible value of the Innovators including their brand value

5. Historical analysis of launched innovations – products, acquisitions, pricing, distribution, business model, services, process – and their impact on current and future revenue and earnings growth

6. Analysis of planned market innovations and potential revenue growth

7. Independent analysis by S & P, Zack’s, Barron’s, IBD and related resources

8. Complete analysis of the Innovators’ customers, competitors, environment and macro-economic factors that could impact their growth and stock performance

9. Wherever possible, interviews with key members of the management

Investment Principles

1. Isolate top Innovators that have demonstrated a solid history of innovations, revenue and earnings growth.

2. Conduct a thorough analysis based on facts to determine the intrinsic value of each selected Innovator relative to its market.

3. Track and invest in top Innovators, so that investments can be made when their stock is available at a discounted price compared to intrinsic value so that a "margin of safety" exists.

4. Increase or decrease investment in a particular Innovator based on appreciation or depreciation in its stock performance, changes in current or projected earnings or revenue growth, changes in management or other market factors.

5. Liquidation of investment in a particular Innovator based on set triggers for performance gains or losses, or change in top Innovators at the end of each calendar year.

Innovation Index Group is grounded on the belief that Top Innovators who have demonstrated a solid history of innovations, revenue and earnings growth are most likely to produce the highest stock market returns in the future. These Innovators need not be the top company by market cap for a particular sector; rather they could very well be challengers or “disrupters” that have demonstrated a real market for their products or services, are growing faster than the rate of the market (at times creating new markets altogether) and possibly grabbing market share from other competitors.

Differentiating Principles

The following principles differentiate our hypothetical investment methodology from other fund and investment managers:

1. Model Investments are limited to the crème de la crème– the best Innovators in their respective markets and industries are chosen after a complete, factual analysis as described earlier.

2. The Top 20 Innovators must each have a market cap of at least $10 billion and annual revenue of $2 billion. Thus, investments are limited to those Innovators who have grown into companies with a significant market capitalization and have demonstrated a superior history of revenue and earnings growth.

3. Model Investments for each Innovator are weighted based on the each Innovator’s launched innovations in the previous year, announced innovations for the upcoming year, market capitalization, earnings growth, revenue growth, projected earnings and revenue growth, analyst recommendations, historical and projected stock performance, current stock price, market fluctuations and its impact on the current stock price, “margin of safety,” and other micro and macro economic factors that could impact the growth of the innovator in the coming year.

4. A set percent of the available capital is set aside for short-term investments in the Innovators.

5. Model Investments are limited to the top 20 Innovators, because we believe on focusing on a select group of companies with the most growth potential.

Inflation needs to be stalled, and then reversed. Recession may last another couple of quarters or more, or may show modest turnaround within the next year. Housing industry may take the longest to recover. The Fed and the government are busy trying to help in all these areas by increasing liquidity in the financial markets, lowering the interest rates, providing rebate checks to consumers and families, and also beginning the work towards strengthening the dollar. The sooner these three elements improve for the American consumer, the better the chances of an economic rebound in the fourth quarter of 2008, and a resulting growth in the stock market.

Innovation Index Group believes that the U.S. economy will recover in the 2nd half of 2008, and the Top Innovators of The Innovation Index will reward the patient, long-term investor. So far, most of the top innovators have delivered solid earnings during the first quarter of 2008 owing to the strengths and growth in their global business, new innovations spurring new business growth, maintenance of US earnings, and benefits from the currency fluctuations. It would be great to witness a spiraling growth of their US earnings in the 2nd half 2008.

Innovation Index Group has long-term BUY recommendations on the Top 20 Innovators of The Innovation Index.

About Innovation Index Group:

Innovation Index Group, Inc. is a new research & management company focused on systematically identifying, tracking, researching and reporting on the most innovative publicly traded companies in North America – collectively called the Innovation Index. Over the past six years, the Innovation Index would have generated a gross average annual return of 40% based on historical model.* The Innovation Index returned 66% in 2007*.

The Innovation Index Reports:

Learn about The Innovation Index - Innovation Index Fund tracks The Innovation Index
The Innovation Index closes 2007 at 66% - 2007 Annual Report on the Innovation Index
Top 50 Innovative Companies in the world - 2007 Report on Top 50 Innovative 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

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 returned 66% in 2007 based on performance model, and would have returned 174% over the previous five years (2002-2006) based on historical model*. This assumes equal investment in each stock of The Innovation Index as of December 31, 2001. An average of $100 invested in The Innovation Index on December 31, 2001 returned $454 as of December 31, 2007. By comparison, $100 invested in S & P 500 returned 28% or $129, $100 invested in NASDAQ returned 34% or $136, and $100 invested in the Dow Jones Index returned 30% or $131 through December 31, 2007. The Innovation Index beats the S & P 500, NASDAQ and Dow Jones Index by more than seven times over the past six years.*

Alphabetical list of the Top 20 Innovators of The Innovation Index for 2008 and their stock ticker symbols:

3M Company - (NYSE: MMM)
Amazon.com, Inc. - (NASDAQ: AMZN)
America Movil - (NYSE: AMX)
Apple Inc. - (NASDAQ: AAPL)
AT&T Inc. - (NYSE: T)
Best Buy Co., Inc. - (NYSE: BBY)
Cisco Systems, Inc. - (NASDAQ: CSCO)
Costco Wholesale Corporation - (NASDAQ: COST)
eBay Inc. - (NASDAQ: EBAY)
General Electric Co. - (NYSE: GE)
Google Inc. - (NASDAQ: GOOG)
Hewlett-Packard Co. - (NYSE: HPQ)
Intel Corporation - (NASDAQ: INTC)
International Business Machines Corp. - (NYSE: IBM)
Merck & Co., Inc. - (NYSE: MRK)
McDonald's Corporation (NYSE: MCD)
Microsoft Corporation - (NASDAQ: MSFT)
NIKE, Inc. - (NYSE: NKE)
Research In Motion Limited - (NASDAQ: RIMM)
The Proctor & Gamble Company - (NYSE: PG)

The Innovation Index will analyze the positions and standings of the Top 20 Innovators at the end of each year. For 2008, there will be no further changes in The Innovation Index.

Disclaimer: The Innovation Index Group, Inc. invests in the stocks comprising The Innovation Index.
*Past Performance Does Not Guarantee Future Results

The Innovation Index surges to 7%, beats major U.S. indices

The Innovation Index surged in the first week of April, and is now up 7% through April 5, 2007. The Innovation Index leads the major U.S. indices. S & P 500 also gained ground last week and is now up 2% for the year; NASDAQ rebounded as well and is now up 2% for the year; the Dow Jones Index gained 2% for the week, and is now up 1% for the year.



The Innovation Index closed at 74.10 on April 5, 2007, up 7% from the closing price of 69.31 on December 29, 2006.

The first week of April 2007 was phenomenal for the Top 20 Innovators: 16 of the Top 20 Innovators showed positive gains, only 1 of the Top 20 Innovators was in the negative territory, and 3 Innovators were unchanged last week.

Weekly Advances

Research In Motion Limited (NASDAQ: RIMM) (RIM) led all innovators with 7% gain for the week. RIM is now up 14% for the year, and importantly having a double-digit gain for the year. Can RIM come close to the 94% runaway performance of 2006?

Amazon.com, Inc. (NASDAQ: AMZN) had a solid first week in April, and gained 5%. Amazon.com is looking good at 6% gains for the year, and is poised to post double-digit gains for 2007 barring any revenue and profit setbacks. This would be a welcome change for Amazon.com investors.

Hewlett-Packard Co. (NYSE: HPQ) gained 4% last week, and is now up 1% for the year. HP's first quarter stock performance was up, down and sideways; however, HP is a tech bellweather, and a top innovator. Expect double-digit gains for the year.

America Movil (NYSE: AMX) tagged another 4% and is now up 10% for the year; the Mexican company is doing well by acquiring or obtaining stakes of overseas Wireless and Telco operators, and gaining subscribers.

Google Inc. (NASDAQ: GOOG), Southwest Airlines Co. (NYSE: LUV), Target Corp. (NYSE: TGT) and Wal-Mart Stores, Inc. (NYSE: WMT) each gained 3% last week.

Weekly Declines

General Electric Co. (NYSE: GE) was the lone decliner last week by a mere 1%. GE is down 6% for the year. Is GE undervalued despite all the innovations and revenue gains?

Yearly Leaders and Laggards

Yahoo! Inc. (NASDAQ: YHOO) leads all innovators with 25% gains for the year, and we are only in April. At this rate, can Yahoo gain 50% in 2007? It is quite possible. RIM is up 14% in 2007. eBay Inc. (NASDAQ: EBAY) and Apple Inc. (NASDAQ: AAPL) are each tied with 12% gains. Considering that we are only in April, it is possible that these innovators can have breakthrough performance in 2007. Starbucks Corporation (NASDAQ: SBUX) is down 11% for the year.

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 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.

The Innovation Index gains 3% during the first quarter, beats U.S. major indices – Quarterly Report 03-30-07

The Innovation Index gained 3% during the first quarter of 2007 despite a broader market weakness. The Innovation Index leads the major U.S. indices owing to the combined strength of the Top 20 Innovators. S & P 500 and NASDAQ finished the quarter unchanged – 0%; the Dow Jones Index is down 1% for the quarter.

The Innovation Index closed at 71.72 on March 30, 2007, up 3% from the closing price of 69.31 on December 29, 2006.

How solid was the first quarter for the Top 20 Innovators? 8 of the Top 20 Innovators showed positive gains during the first quarter, while 12 of the Top 20 Innovators had negative returns, and no Innovators were unchanged.

Quarterly Leaders

Yahoo! Inc. (NASDAQ: YHOO) is leading the top 20 innovators with 23% gain for the first quarter. What’s remarkable is that Yahoo was down 35% in 2006; 2007 is a whole new ball game for Yahoo! in large part owing to the new Panama search, and a host of new innovations from Yahoo! Can Yahoo! catch Google? Apple Inc. (NASDAQ: AAPL) and eBay Inc. (NASDAQ: EBAY) are tied at 11% gains during the first quarter. Apple had a solid 2006 at 18% return; however, 2007 performance can easily eclipse the 2006 stock gains due to the introduction of AppleTV and the upcoming launch of iPhone. eBay is another Innovator who was down 30% in 2006, and is rebounding well in 2007. The pipeline of innovations and growth in core auction business is paying off for eBay.

2006’s top innovator with regards to stock performance is having a good 2007 as well: Research in Motion Limited (NASDAQ: RIMM) (RIM) is having a go again, thanks in large part due to the new Blackberry and Pearl, and the global network expansion of Blackberry. RIM is up 7% in 2007, and was up 94% in 2006.

Quarterly Laggards

Which Innovators are behind in stock performance at this stage of the game? Answer: Many. 12 of the Top 20 Innovators are showing negative returns for the first quarter. An overall majority. However, only one Innovator is showing double-digit negative returns, and has catching up to do - Starbucks Corporation (NASDAQ: SBUX) is down 11% during the first quarter of 2007. Starbucks performed remarkably well in 2006 at 18% stock gain. Can Starbucks rebound in the second quarter? Last year’s runner up in stock performance gains at 60%, and one of the top five innovators Cisco Systems, Inc. (NASDAQ: CSCO) is down 7% in 2007. Why is Cisco down? Cisco made some big acquisitions in the first quarter including that of WebEx. However, the investors are skittish on Cisco’s ability to digest these acquisitions and execute well on the core business. Another bell-weather is weathering a storm, and is down at 7% in 2007: Dell Inc. - (NASDAQ: DELL). However, Dell is up from the lowest point of the year, and is poised to rebound in the second half as Michael Dell begins the turnaround. Microsoft Corporation (NASDAQ: MSFT) had the biggest launch in the history, Windows Vista. However, the stock is still down 6% for the year. Can Microsoft reverse this slide and end the year in the positive territory? Bullish results from Vista, and the revenue impact from recent innovations can help.

Second Quarter Projections

What innovations and related stock gains can be expected in the second quarter? All Innovators would have announced their quarterly results, which most analysts believe to be in the positive. If the Innovators easily beat these estimates, project a good outlook, and announce brand new Innovations, The Innovation Index will runaway to double-digit gains. If the market takes another downturn, and the overall economy cools, the second quarter could be trying and will test The Innovation Index.

I posted the Top 10 Innovations from the Top 20 Innovators last week that summarizes the past week’s key innovations.

The Innovation Index Annual Report

I posted The Innovation Index Annual Report earlier in the year that included three Chapters:

Chapter One - Total Innovation Activity at the Top 20 Innovators
Chapter Two - The Top Innovator - The Innovator of Innovators
Chapter Three - The Innovation Insights and Roundup

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.

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.

The Innovation Index roars back, gains 4%, beats U.S. major indices – Weekly Report 03-21-07

The Innovation Index notched solid gains last week, and is now up 4% for the year. The Innovation Index leads the major U.S. indices. S & P 500 also gained some ground last week and is now up 1% for the year; NASDAQ made up for last week’s loss and is back in the positive territory at 2% for the year; the Dow Jones Index gained 3% for the week, and is unchanged for the year.

The Innovation Index closed at 71.91 on March 21, 2007, up 4% from the closing price of 69.31 on December 29, 2006.

How great was last week for the Top 20 Innovators? 19 of the Top 20 Innovators showed positive gains (compared to 4 the previous week), only 1 of the Top 20 Innovators dipped in the red (compared to 9 the previous week), and no Innovators were unchanged last week (compared to 7).

Weekly Advances

Starbucks Corporation (NASDAQ: SBUX) was the largest weekly gainer among the Top 20 Innovators at 10%. Starbucks is now only down 9% for the year. America Movil (NYSE: AMX) added another 7% to the previous week’s gains, and is now up 5% for the year. Amazon.com, Inc. (NASDAQ: AMZN) added 5% last week, its largest weekly gain of the year, and is back in the black at 1%.

Starbucks and Concord Music Group announced the formation of a new record label, Hear Music, which will forge relationships directly with artists and distribute recordings at Starbucks locations as well as through traditional music channels. This agreement gives Hear Music a greater hand in developing music that fits within the profile of the Starbucks Experience. Starbucks showed great success with Ray Charles' "Genius Loves Company" and Sergio Mendes' "Timeless." Starbucks also announced that music legend Paul McCartney would launch the Hear Music's inaugural CD release in early summer. – Starbucks press releases

Amazon.com announced the launch of its Classical Music Blowout Store that offers customers a hand-picked selection of more than 2,000 classical music titles across genres including instrumental classical, opera and vocal classical. Citing significant growth of classical music at both Amazon.com and industry wide, the world's largest online retailer created the Classical Music Blowout store to meet the increasing demand for affordable but high-quality classical music. CustomFlix Labs, Inc., a wholly owned subsidiary of Amazon.com, Inc., also announced that CustomFlix videos are now available through the recently launched Amazon Unbox on TiVo service, greatly expanding the selection of independent videos and other content from independent producers available to TiVo's 1.5 million broadband-ready TiVo Series2(TM) and Series3(TM) subscribers. This unique Amazon Unbox on TiVo service allows TiVo subscribers to rent or purchase movies, TV shows, and now independent content available through Amazon Unbox and watch them directly on their television sets. – Amazon.com press releases

America Movil is planning to participate in the recently announced auction for 3G spectrum by Chile.

Weekly Declines

Blackberry maker Research In Motion Limited (NASDAQ: RIMM) was the only Innovator that was down last week; RIMM was down 1% last week, although it is doing well at 6% gain for the year.

Research In Motion (RIM) (TSX: RIM) launched the new red BlackBerry(R) Pearl(TM), featuring a stylish new color for the award-winning smartphone. The BlackBerry Pearl is now available from AT&T (NYSE: T) with a beautiful, dark red finish for the first time. The BlackBerry Pearl comes complete with a digital camera, multi-media player and an expandable memory slot. It also boasts an incredibly sleek design while continuing to provide the full BlackBerry functionality and renowned user experience that has made BlackBerry a global success. – Research In Motion press release

Yearly Leaders and Laggards

Yahoo! Inc. (NASDAQ: YHOO) is leading the top 20 innovators with 23% gain for the year. Yahoo! was up 5% last week. Apple Inc. - (NASDAQ: AAPL) is up to double-digit gains again for the year at 11% owing to 4% gains last week. eBay Inc. (NASDAQ: EBAY) reversed the recent slide, was up 3% last week, and now posts 7% gain for the year. Target Corp. - (NYSE: TGT) also performed well last week going up 4%, and is now up 8% for the year.

Yahoo! Inc. expanded the reach of the popular new Yahoo! oneSearch service to the Mobile Web in the United States. Yahoo! oneSearch reinvents search to give consumers exactly what they want on their mobile device - instant answers.” “Yahoo! launched Yahoo! Widgets 4, a new version of the industry leading desktop Widgets platform. Yahoo! Widgets give consumers a live, at-a-glance view of their favorite Internet information and services on the desktop, including a new Widget Dock, new and improved Widgets, dramatically improved performance, new and streamlined installation, improved authoring tools and automatic updates. – Yahoo! press releases

Apple Inc. began shipping AppleTV, a device that allows people to wirelessly stream and store digital content that is loaded on iTunes (PC or Mac) to their widescreen televisions. AppleTV comes with a 40-gigabyte hard drive that can store 50 hours worth of video, and costs $299. Elton John catalogue will be available exclusively from Apple Inc.'s iTunes service from March 26 until April 30 before being made available on other legal download services. – Apple press releases

Skype, an eBay business, announced Skype(TM) 3.1 for Windows, introducing SkypeFind(TM) and Skype Prime(TM) (Beta), giving people new ways to share knowledge with one another. These new additions take Skype beyond simple voice and video calls into new markets where access to expertise and knowledge are essential commodities. Skype is also relaunching its online Skype Shop (skype.com/shop) in the United States to offer Skype Certified(TM) devices and accessories that can be used to enhance consumers' Skype user experience. – eBay press releases

Starbucks Corporation (NASDAQ: SBUX) is now only down 9% this year. Dell Inc. (NASDAQ: DELL) went up 3% last week, and has managed to stop the slide. Dell is down 9% for the year.

Announced Key Innovations at The Top 20 Innovators:

News Corp. and NBC Universal say they plan to take on the phenomenally popular online video-sharing site YouTube of Google (NASDAQ: GOOG) with a video effort of their own that will launch this summer, featuring an array of full-length movies and television shows, as well as clips, from the studios' libraries. Viacom pursued one route by suing YouTube for copyright infringement earlier this month, but it had been assumed that Hollywood's content providers would ultimately respond to YouTube with sites of their own.

Tide, a division of P & G (NYSE: PG) announced the launch of its new compacted high efficiency (HE) liquid laundry detergents available in variants Tide(R) HE with Bleach Alternative and Tide(R) HE with Febreze Freshness.

Microsoft Corp. (NASDAQ: MSFT) unveiled a small-business Internet protocol (IP) phone system, code-named "Response Point," designed for ease of use and manageability. The new system comes in an easy-to-install box, supports both voice over IP (VoIP) and traditional phone lines, and includes a voice-activated user interface.

Digital asset cataloging pioneer iView Multimedia Ltd., a wholly-owned subsidiary of Microsoft Corp., announced the availability of The Getty Images iView Submission Utility. Getty Images is the world's leading provider of imagery, film and digital services.

Microsoft also made three significant announcements to grab Search market share. Is Microsoft innovating or buying Search market share? You decide.

Southwest Airlines (NYSE: LUV) announced the addition of several new flights to key destinations. The scheduled delivery of several new Boeing aircraft is allowing Southwest Airlines to add more nonstop flights to cities such as Denver, Oakland, Orlando, and Houston Hobby.

IBM (NYSE: IBM) unveiled a comprehensive strategy to enable dynamic warehousing, a new generation of business intelligence capabilities that enable organizations to gain real-time insight and value from their business information. IBM also announced a new emerging technology that helps blind and visually impaired people experience streaming video and animation on the Internet. Designed at IBM's Tokyo Research Laboratory, the new multimedia browsing accessibility tool potentially opens a world of rich content to visually impaired people around the world, who number more than 161 million. IBM and Cisco, a global leader in networking, today announced they will partner to provide emergency crisis response capabilities for the first time as an end-to-end managed service.

IBM and Idea Cellular Ltd. (Idea), a leading Indian GSM mobile services provider and an Aditya Birla Group company, today announced a 10-year business transformation pact to integrate, innovate and transform Idea's business processes and IT infrastructure.

Google Inc. (NASDAQ: GOOG) announced separate partnerships with the Rwandan Ministry of Infrastructure and the Kenya Education Network (KENET). As a result, Rwanda's educational institutions and government ministries, and Kenya's universities are starting to use Google Apps(TM) - Google's set of hosted and customizable communications services.

HP (NYSE: HPQ) announced it has signed a definitive agreement to acquire Tabblo Inc., a privately-held developer of web-based software located in Cambridge, Mass. HP plans to leverage Tabblo's technologies to make printing from the web easier and more convenient than it is today. Tabblo's technology allows people to simply and efficiently arrange and print text, graphics and photos from the web. This is made possible by Tabblo's custom template engine, using an AJAX-enriched interface.

GE Security, Inc., a wholly owned indirect subsidiary of the General Electric Co. (NYSE: GE), announced the availability of the DR2 and DM2, two analog, fixed-dome cameras that offer multiple features previously not available in single cameras. The DR2 and DM2 are the latest additions to GE Security's line of wide dynamic range cameras, joining the CamPlus 2 and UltraView XP3, introduced recently.

General Imaging today launched its highly anticipated line of GE-branded digital cameras at PMA 07, the Photo Marketing Association's annual international conference and the leading photo industry convention and trade show. The line of eight cameras represents the first time General Electric (NYSE: GE) has bestowed its highly regarded and trusted brand on a consumer camera line. General Imaging, led by Chairman & CEO Hiroshi "Hugh" Komiya, is the exclusive worldwide licensee for the GE cameras.

GE Capital Solutions, the business-to-business leasing, financing and asset management unit of General Electric Co. and The Blackstone Group, through its affiliates, agreed to acquire PHH Corporation (NYSE: PHH) in an all-cash transaction for $31.50 per share or approximately $1.8 billion. Headquartered in Mount Laurel, NJ, PHH Corporation comprises PHH Arval, a North American fleet management services provider, and PHH Mortgage, a retail originator and servicer of residential mortgages in the United States. PHH Corporation will be purchased by GE, which will retain PHH Arval and sell PHH Mortgage to Blackstone immediately after closing.

GE announced it is accelerating its solar energy research program with the help of an $8.1 million grant from the U.S. Department of Energy as part of President Bush's Solar America Initiative.

Dell (NASDAQ: DELL) and AAA announced a special agreement to put technology in the hands of tens of millions of new customers, AAA members at home and on the road. AAA members will receive 6-percent discounts on Dell systems beginning today. Through the agreement, members also can learn about various resources available from Dell to help make choosing the right mobile or home and office technology as easy as making travel arrangements.

Dell(TM) and Alienware(R) customers purchasing select XPS(TM), Aurora(TM) and Area 51(R) gaming desktop computers can super-size their storage space by adding the world's first consumer one terabyte (TB) hard drive from Hitachi Global Storage Technologies. The extra hard drive capacity provides enough space to store an incredible amount of data -- a million photos, 16 days of DVD quality video or even a million minutes of music.

Dell announced the launch of Direct2Dell Chinese (www.direct2dell.com/chinese), becoming the first computer systems company to open a corporate blog in Chinese. The new blog was announced on the eve of Michael Dell's latest visit to China.

IBM Corp. (IBM) and Cisco Systems Inc. (NASDAQ: CSCO) on Tuesday launched a new all-in-one service for governments and institutions to buy disaster communications services. The new product line combines hardware, software and support services into a single bundle. According to IBM, it will allow cities and small countries to rely on a backup communications network without having to build and maintain it themselves.

Linksys(R), a Division of Cisco Systems, Inc., announced the ADSL2+ Gateway with VoIP (AG310), its newest intelligent ADSL Gateway solution for internet connectivity and VoIP. Linksys(R) also announced the Linksys 8-Port Analog Telephone Adapter (SPA8000). This new ATA can be used in business and consumer environments where multiple phones require access to the Internet to use Voice-Over-IP (VOIP) service.

Is Cisco betting big with the $3.2 billion acquisition of WebEx? Find out here.

TiVo Inc. (NASDAQ: TIVO), the creator of and a leader in television services for digital video recorders (DVRs), together with Amazon.com, Inc. (NASDAQ: AMZN) announced that "Amazon Unbox on TiVo" is now available to more than 1.5 million broadband-ready TiVo subscribers.

The Innovation Index Annual Report

I posted The Innovation Index Annual Report earlier in the year that included three Chapters:

Chapter One - Total Innovation Activity at the Top 20 Innovators
Chapter Two - The Top Innovator - The Innovator of Innovators
Chapter Three - The Innovation Insights and Roundup

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.

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.

The Innovation Index unchanged, still beats U.S. major indices – Weekly Report 03-14-07

The Innovation Index stayed even last week, and is now unchanged for the year. However, The Innovation Index leads the major U.S. indices. S & P 500 and NASDAQ are each down 2% for the year, while the Dow Jones Index is now down 3% for the year.



The Innovation Index closed at 69.53 on March 14, 2007, practically unchanged from the closing price of 69.31 on December 29, 2006.

In a sign of perhaps better results on the horizon, 4 of the Top 20 Innovators showed positive gains (compared to 4 the previous week), 9 of the Top 20 Innovators dipped in the red (compared to 14 the previous week), and 7 Innovators were unchanged last week (compared to 2).

Weekly Advances

America Movil (NYSE: AMX) was the largest weekly gainer last week at 4%. 3M Company (NYSE: MMM) made a nice comeback with gains of 3%. The massive stock buy back at 3M and new business unit launch is helping 3M; 3M is only down 2% for the year. Apple Inc. (NASDAQ: AAPL) tagged another 3% gain for the week, and is now up 6% for the year. Intel Corporation (NYSE: INTC) made a nice gain of 1% last week. Intel should rally well for the rest of the year.

“Intel announced two energy-efficient 50-watt server processors that represent a 35- to nearly 60-percent decrease in power from Intel's existing 80- and 120-watt quad-core server products. These new processors, requiring just 12.5 watts of power for each of the four cores or processing engines, deliver similar performance yet set a new standard in energy efficiency.” Intel will invest a total US$2.5 billion in a chip plant in China. “The approval comes as China's consumer market continues to develop rapidly, particularly for personal computers and mobile phones, and as Beijing encourages industries and companies to develop and use higher-end technologies.” – Intel press announcements.

“3M Health Care announced the launch of a new Medical Diagnostics business unit that will focus on developing and commercializing rapid diagnostic product solutions for the detection of key infectious pathogens, including methicillin-resistant Staphylococcus aureus (MRSA) and other treatment-resistant microbes. This new business builds on 3M Health Care's leading infection prevention product portfolio by offering hospitals new rapid diagnostic tests to detect the presence of potentially destructive microbes before they spread and possibly infect patients. 3M Medical Diagnostics will provide hospitals with rapid, easy-to-use microbial diagnostic tests that may help improve patient outcomes, reduce costs, reduce the impact of resistant microbes and improve laboratory profitability.” – 3M press announcement.

Weekly Declines

Wal-Mart Stores, Inc. (NYSE: WMT) was the largest decliner last week. Wal-Mart shares dropped 5%, and are now down 1% for the year. Starbucks Corporation (NASDAQ: SBUX) is on a dive, losing another 4% last week. Yahoo! Inc. (NASDAQ: YHOO), Google Inc. (NASDAQ: GOOG) and Target Corp. (NYSE: TGT) were each down 2% last week.

Yearly Leaders and Laggards

Yahoo! Inc. (NASDAQ: YHOO) is leading the top 20 innovators with 17% gain for the year. Research In Motion Limited (NASDAQ: RIMM) and Apple Inc. (NASDAQ: AAPL) are tied at 6% each.

Starbucks Corporation (NASDAQ: SBUX) shares are now down 17% this year. How can Starbucks turnaround this stock performance after posting a solid 18% gain last year? Dell Inc. (NASDAQ: DELL) was unchanged last week, and has managed to stop the downward stock spiral for now. Dell is down 11% for the year. Dell has a tough road ahead as Dell begins the turnaround.

The Innovation Index Annual Report

I posted The Innovation Index Annual Report earlier in the year that included three Chapters:

Chapter One - Total Innovation Activity at the Top 20 Innovators
Chapter Two - The Top Innovator - The Innovator of Innovators
Chapter Three - The Innovation Insights and Roundup

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 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.

The Innovation Index drops 1%, even for the year – Weekly Report 03-07-07

The Innovation Index dropped another 1% last week owing to broad market weakness, and is now unchanged for the year. However, The Innovation Index leads the major U.S. indices. S & P 500, NASDAQ and Dow Jones Index are each down 2% for the year.



The Innovation Index closed at 69.28 on March 07, 2007, unchanged, from the closing price of 69.31 on December 29, 2006.

Only 4 of the Top 20 Innovators showed positive gains, 14 of the Top 20 Innovators dipped in the red, and 2 Innovators were unchanged last week.

Weekly Advances

Apple Inc. (NASDAQ: AAPL) made a comeback last week, and was up 4% for the week, and 3% for the year. The excitement surrounds the impending launch of Apple TV, potential yield of $900 million from Adobe’s first design suite CS3 to be launched on Intel-based Macs, and plans to open 35 to 40 new stores in 2007. Apple is opening a new store in Austin, Texas this week. Apple also released the latest versions of iTunes and QuickTime, and announced plans to use NAND flash memory.

Google Inc. (NASDAQ: GOOG) was up 1% last week. Google won a key court ruling in a patent dispute over its popular three-dimensional software that provides Internet tours of the Earth. Friendster hooked up with Google to provide ads and monetize the visitors and traffic. IBM (NYSE: IBM) and Google are partnering to bring the consumer Internet into the office – “millions of users of IBM WebSphere will be able to choose from 4,000 existing Google Gadgets services -- mini-Web applications that users can add with the click of a button onto public sites or internal office intranets.” Google's collection of Web sites replaced Microsoft Corp.'s as the third most trafficked in the United States.

What if Apple and Google merged? Find out more at: The Apple Google Juggernaut - $66 Billion - overtaking Microsoft?

HP - Hewlett-Packard Co. (NYSE: HPQ) was up 2%, and International Business Machines Corp. (NYSE: IBM) was up 1% last week.

Weekly Declines

Intel Corporation (NYSE: INTC) dropped 4% last week, and is now down 5% in 2007. Research In Motion Limited (NASDAQ: RIMM) fell 4% also, however is up 6% in 2007. 12 other innovators dropped 1% to 3% last week owing to wide-ranging market weakness. In particular, eBay Inc. (NASDAQ: EBAY) dropped 3%, and is now only up 3% for the year. eBay was up over 10% earlier in the year.

Yearly Leaders and Laggards

Yahoo! (NASDAQ: YHOO) is leading the top 20 innovators with 19% gain for the year; however, Yahoo! shares were down 5% in today’s trading owing to the changing partnership with AT&T. A joint statement was made by AT&T and Yahoo to alleviate the concerns from the investors and curb the speculation. Target Corp (NYSE: TGT) is up 6% for the year. Target announced the grand opening of 15 Target stores on Sunday, March 11, and also announced same store sales increase of 5.7% in February. Starbucks Corporation (NASDAQ: SBUX) dropped another 1% last week, and is now down 14% for the year, after posting a solid 18% gain in 2006. Dell Inc. (NASDAQ: DELL) is also back in double-digit losses for the year at 11%. Dell has a tough road ahead as it begins the turnaround.

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 is even more impressive, and has returned 174% over the last five years. This assumes equal investment in each stock of The Innovation Index.

The alphabetical list of the top 20 Innovators of The Innovation Index along with their stock ticker symbols are presented below:

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.