The worst portfolio on www.stockpickr.com

One of the worst investment or speculative ideas is to buy a stock because it has heavy short interest. Moronic. It makes sense to go long a stock with heavy short interest only when a.the stock price is moving against the short position b.the fundamentals are set to improve c.insiders are buying the stock d.earnings estimates are rising. Without several of these catalysts, this is a losing battle.

There is a portfolio that is receiving many views on www.stockpickr.com entitled "Short Squeezes. Right now only one of the ten ideas is in a short squeeze, Cons Tomoka Land (CTO). The others are dogs or just starting to head lower. Years ago Charles Ellis wrote a great article entitled "The Loser's Game". The article discussed how poorly most managers were at picking stocks on the long side. A worthy read of anyone who buys stocks.

Google (GOOG) to infinity and beyond!!!

We believe that Google (GOOG) is now ready to rock higher. Last January, the stock was at $475 and tonight it closed just under $500. The stock has gone nowhere for a year. We owe the credit for this stock coming into our portfolio to one of our favorite and most insightful institutional clients in Avon, CT. He got us thinking about Google during a discussion about the likelihood they would acquire Sun Microsystems (SUNW).

For those who like options we will buy a June 700 call for $2.10. The premium in Google calls is very expensive but is rational. This is an extremely speculative options trade.

How can we recommend this stock? Easy!

First, earnings estimates for the year just ended are $10.30 and 90 days ago were $9.97. 90 days ago the December 07 numbers were $13.07 and now are $13.79. Google does not guide the street and analysts are left guessing and are constantly on the low side with their estimates. Next year's number could easily be $15. The December 2006 P/E will be around 48.5.

Therefore, if it can come in at $15 and the P/E were to remain the same our future price would be 15 X 48.5 = $727.50. I threw these numbers by my Dad last night and he pushed me to ask what is the risk? A very good question. This is what Tuck MBAs and former marines do. They never quit asking questions or pushing you to do that last mile. Thanks for the insight as the readers will like this extra step.

If the $15 were to be reached in 2007 and the P/E were to fall to 30 then the price would go to $450. A second scenario would be for the earnings to drop to $10 and the P/E to drop to 25 then the price would go to $250. However, if the P/E were to drop to 40 and Google could still hit $15 in earnings then the price would go to $600. There is your risk analysis and a good exercise that anyone with a major position should undertake a few times a year to determine if the stock is ahead of itself.

We note $800 invested in Cisco (CSCO) when it came public was worth $800,000 at the peak ten years later in 2000. Google came public in August of 2004, a little less than 2 1/2 years ago. A growth stock can grow for 10 years if the business model is great. Cisco split its stock 10 times between 1990 and 2000. Google has yet to do one stock split. $800 invested in Google is now worth around $3,600. We note the company has no long term debt with over $10.4 billion of cash and short term investments. Sales will exceed $9 billion from $6 billion.

Once the stock clears $500 it is off to the races. We will be long this stock for a ride it has not seen the likes of in two years. We note the Erlanger Short Intensity is 77%. Our friends at Bluehawk have a current target of $530.23 with a 39 week target of $691.49 and a 3 1/2 year target of $983.92. This valuation is based on cash not on some contrived EBITDA number. Clearly, the growth must be maintained but if Google can achieve such growth then this stock could rival perhaps the greatest growth stock of all time Cisco (CSCO) or Wal-Mart(WMT).

You're Fired

The latest season of The Apprentice began tonight and we were happy to see a lawyer tossed! In fact, there are more lawyers than any other season we can remember. I have a great idea for Trump's next season of The Apprentice.

Let's have a season devoted to fired CEOs of the Fortune 1500. This is becoming quiet the list with the ever widening stock options scandal. I really doubt that Robert Nardelli the latest poster child of corporate ineptitude would last more than two episodes. Maybe we should even bring in a CEO or two from prison. The Koz would probably do great living in the mansion and Skilling would no doubt fit in tent city as he prepared for jail by doing an equivalent to Outward Bound and only ate bugs for a week.

Great Insight on Gerald Ford By Brian Wesbury

I consider Brian Wesbury to be one of the premier economists in this country and have been following since I met him some 18 years ago. Hard to believe that long! Today he wrote a great piece on the legacy of "The Nightmare Fighter". Worth the read.

Gerald Ford: Nightmare Fighter
Brian S. Wesbury; Chief EconomistDate: 1/2/2007

Gerald R. Ford was a Congressman from Michigan in October 1973 when Spiro Agnew (beset by scandal) resigned as Vice President of the United States. For the first time in history, the vice-presidential vacancy provision of the 25th amendment was implemented and Congressman Ford became Vice President of the United States in December 1973.

Just eight months later, after the Watergate-induced resignation of Richard Nixon, Gerald Ford became the 38th President of the United States. This progression of events was about as improbable as the final minutes of the Boise State University football victory over the University of Oklahoma in this year's Fiesta Bowl. Instead of entertainment, however, the mid-1970s were a time of deep crisis for the United States.

To make matters worse, President Ford took office in the ninth month of a severe recession that lasted from November 1973 to March 1975. Real GDP contracted by 2.5%, unemployment rose to 9%, the S&P 500 fell 48%, and inflation jumped to 12%.

Richard Nixon's wage and price controls, tax hikes, and massive spending increases killed economic growth, while easy money (that forced the closure of the gold window) fueled inflation. Gerald Ford inherited a great many nightmares from President Nixon.

Keynesianism dominated, and President Ford could not move unilaterally on economic policy as he did with his pardon of President Nixon. Ford succumbed to pressure from a Democratic Congress and signed onto a series of temporary tax rebates and credits in March 1975. Many credited these tax rates with a recovery in the economy and stock market.

But temporary tax cuts do not boost economic activity. The 1975 recovery was driven by the Federal Reserve when it cut the federal funds rate from 13% to 5.25% in 1974-1975. This easy money fueled more inflation, and because high marginal tax rates and intrusive government were still a drag on growth, the economy remained mired in stagflation.

Alice Rivlin, who was the director of the Congressional Budget Office in 1975, was quoted in the Washington Post just five days ago saying, "Economists don't know how to cope with inflation, slow growth and unemployment at the same time." We assume she meant "didn't know," because policy mistakes caused stagflation in the first place.

Unfortunately, President Ford's proposals to deregulate many industries failed to gain traction. President Ford lost in the 1976 election to Jimmy Carter, and policies continued to spiral out of control until the election of Ronald Reagan. While President Ford ended the political nightmare of Watergate, it was President Reagan's embrace of deregulation, permanent tax cuts and tight money that finally ended the national economic nightmare of stagflation.

This information contains forward-looking statements about various economic trends and strategies. You are cautioned that such forward-looking statements are subject to significant business, economic and competitive uncertainties and actual results could be materially different. There are no guarantees associated with any forecast and the opinions stated here are subject to change at any time and are the opinion of the individual strategist. Data comes from the following sources: Census Bureau, Bureau of Labor Statistics, Bureau of Economic Analysis, the Federal Reserve Board, and Haver Analytics. Data is taken from sources generally believed to be reliable but no guarantee is given to its accuracy.