Time for a market correction

Posted by adesigar on October 24th, 2006


No question about it. The Dow and S&P have been going straight up for months. Not even a single triple digit down day.

  • The Housing market is crashing - The market doesn’t care.
  • Inflation is at the high end of the Feds comfort zone - Fed who? says Mr Market
  • North Korea has nukes - Market shrugs it off.
  • OPEC cuts oil production - So what says the market.
  • Iran/Nigeria/Venezuela problems could spike oil prices - We got reserves.
  • Amaranth collapse - Did something happen? Buy Buy Buy.
  • Too much money chasing too few investment opportunities - Private Equity buying anything they can for an LBO
  • High flying stocks and companies based on eyeball count are back. - Myspace, Facebook, YouTube and anything that’s Web 2.0
  • Momentum funds are back - Lets chase the market, what a brilliant idea. NOT
  • Mutual Fund Mondays are back - Retail investors chasing mutual funds that have already outperformed.

AND finally

  • Frequent use of the scariest words in the investing: “This times its different because….” - Yea right, its different because people want to fool themselves into believing its different

So does that seem like a Goldilocks scenario? To me it seems like a Deja vu from 2000. A lot of people (who seem to live in a Toy story world) are convinced the markets are heading “to infinity and beyond”. Ok I’m exaggerating, but at the very least we need a 5% (600 points) correction to remove froth from the markets. An 8-10% correction would be better IMO.

Search Engines - Is Google’s domination about to end?

Posted by adesigar on August 18th, 2006

Google is the king of search engines but its kingdom under attack. The invaders are Microsoft’s Windows Live, Yahoo and the newly renamed kid on the block Ask.com.

Google’s advantage: At one time most search engines used to display a list of pages containing the search words without ordering the results by importance. The results were like searching for a needle in a bale of hay instead of a haystack, better but still a pain in rear. Then along came Google and its page rankings, the hay was gone. It has taken years for Yahoo, MSN and Ask.com to realise the importance of ordering results by importance and developing the infrastructure and algorithms to provide results comparable to Google.

Search by definition is imprecise since the search engine has no clue what you’re really thinking about. If you type in Apple are you searching for the Fruit or the Company? The search engine has no idea, neither do the advertisers. The only person that knows is you. Google still returns better results but the difference is negligible.


Yahoo: Losing to Google

Lets get this one out of the way. Yahoo is getting its ass handed to it on a plate by Google. Its losing to Google in every aspect from search, functionality, user experience and on the financial side too.


Microsoft: The threat from Vista
The Microsoft threat is not from its search engine but from Internet Explorer 7. Here is a quote from the Internet Explorer features page

Internet Explorer 7 brings your favorite web search providers to you. With the built-in search box, you can search the web at any time without having to open a search provider page. You can display search results in a separate tab, and then open the results in other tabs to quickly compare sites and find the information you want. You can even customize your search by setting your favorite search provider as the default.

As most of you have probably guessed the “default search provider” is Windows Live. What a surprise. So every installation of Vista is potentially a lost user for other search engines. Most users wont bother to change search engines if the default one gives results that are good enough. Search engines can negotiate deals with PC manufacturers to get their search engine set at the default. This will cost money since HP, Dell, Sony wont be providing the service for free. Any future re-installs on these computers from a retail copy of Vista will reset the default back to Windows Live.

Easy to access was another minor advantage that Google had. Type in Google and hit Ctrl+Enter to go to the Google site was easier than “search.msn.com”. Now you just need to type in “live” and hit Ctrl+Enter to get to the Microsoft engine.

Ask.com
: A better user experience

Search engines are no longer about getting users a relevant result. All search engines do that. Engines need to differentiate themselves by providing unique features and assisting their users manage the results. Ask.com has done a phenomenal job of differentiating itself. Personally I love the binoculars which give a quick view of the site in a pop-up. I also like the “Narrow your Search”, “Expand your Search” and “Related Names” sidebars. Ask.com also has a nice feature (probably from when it was called AskJeeves.com” where you can ask a question and it will try to answer the question along with providing search results. For all of these reasons Ask.com is the fastest growing search

Conclusion: Google is a good company with good earnings and growth but its dominance is under threat from Microsoft and Ask.com. I prefer IACI for its Ask.com search engine which has a better user experience and is growing faster than Google. While Google is a one trick pony IACI has a diversified economic float and a brilliant CEO in Barry Diller.

Conflicts : I own shares of Microsoft and IAC/Interactive Corp


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