FORBES.COM INVESTMENT GURU WEEKLY

WEEK OF MAY 12, 2008

Adviser Soapbox: A Lofty Perch For Google
As I know from my own experience as an entrepreneur, Google's online ad competitors are a joke.
Clem Chambers

Google and Microsoft are fighting to the death, and Microsoft is losing. A huge slug of Microsoft's income is from "shrink wrapped" applications, and this is going to be cannibalized on the Net. In order for Microsoft to continue to succeed, it will have to crack online advertising, because software loses its old fashioned "price ticket" merchantability online. The winning products will be free at the point of use. As such, Microsoft's adCenter is the pivot around which the whole company's future will develop.

Click here for more on how Microsoft stacks up against Google.

Guru Picks: Gurus Go Deep Into Energy, Sell Sigma
The best performing online investors find opportunities in an energy company and candy maker.
Joshua Lipton, data from Marketocracy

The best performing online investors, Marketocracy's M100, have continued to emphasize energy in their portfolios. That has proven to be a wise bet. This earnings season, companies in the energy sector reported the highest earnings growth rate of any sector at 26%, according to Thomson Reuters. A year ago, the M100's energy holdings made up 13% of their combined portfolios. Now their holdings are approaching 25% of their overall portfolios. Hedging their bets against a slowing economy, the M100 also decided it would be wise to pick up a classic recession-proof play. So the gurus looked to the consumer staples sector.

Adviser Soapbox: Four Stocks To Own Now
Buy companies that crushed analyst expectations in the most recent quarter. Start with these four.
Jim Oberweis, The Oberweis Report

Market bottoms are like giving birth. The exact moment is hard to predict, but it is always painful. And once it is over, it sure feels better. March 2008 will likely prove to be that bottom. As we noted last month, high-growth small-cap stocks were the cheapest we've seen in more than a decade. Stocks are still very cheap and for certain issues, our earnings visibility is quite high, particularly for companies which have already reported earnings for the March quarter.

Adviser Soapbox: Follow The Fed Into Small-Caps
Fed policy will be loose until the economy is fully rehabilitated. Small-caps are a smart bet.
Doug Roberts, Channel Capital Research

If the Fed adopts a monetary policy that is too tight in an attempt to dampen inflationary expectations, it could cause a severe recession. Thus, the current environment of "loose" monetary policy is unlikely to end soon. What implications does this have for the average investor? The key is real interest rates: the nominal (or stated) interest rate minus the rate of inflation. Negative real interest rates indicate a loose monetary policy and favor small-cap stocks, and positive real interest rates indicate a tight monetary policy favoring large-cap stocks like you would find in the S&P 500. Following the Fed gives you a much better idea of which areas of the market will prosper given our rapidly changing economic environment.

Where are we now in this strategy? Click here to find out.

Options Watch: Networking Stocks Come Calling
Cisco slumps after earnings, but several stocks from the networking group look quite strong.
Jocelynn Drake, Option Advisor

Technology stocks have been beaten down in 2008, with the tech-laden Nasdaq Composite dropping about 8% since January. However, within the sector, the AMEX Networking Index (NWX) is beginning to show signs of life. The index has outperformed the Nasdaq on a daily relative-strength basis since early April, as the NWX has rallied along support at its 10-day and 20-day moving averages. This strength has pulled its 10-week moving average up, and the intermediate-term line is now on a collision course with its 20-week counterpart. A bullish cross of this pair could indicate additional upside for the networking group.

Click here for several bright spots in the networking sector.

Investment Guide: Subtle Shades of Green
It's not too late to find cheap "green" stocks. Look beyond the obvious to companies quietly boosting the sector's growth.
Erika Brown

Say what you will about global warming, there's no denying that "green" stocks--the ones promising to help the world burn less fossil fuel--are hotter than a July day. SunPower, a maker of solar cells and panels, is trading at $82, or 326 times trailing earnings. That makes First Solar, at $275 a share but only 110 times earnings, a relative bargain. If you'd like some exposure to green stocks but fear getting scorched by such multiples, look around--beyond the billboard players.

Click here for 8 little-known green stocks.

Stock of the Week: Conglomerate Cruises Higher
Danaher is one of those companies you don't really hear much about. But it's a good buy right now.
John Dobosz

What works in this kind of a stock market? For the past three months, large diversified multinationals have done decently, after experiencing a horrible start to the year. Joseph Parnes, editor of Shortex, recommends that his readers hold a long position in Danaher Corp. Washington, D.C.-based Danaher is a conglomerate producing everything from water treatment plants to toolboxes. The company operates in four areas: professional instrumentation, medical technologies, industrial technologies, and tools and components.

Investment Guide: Building Boom
Financial troubles have turned net leases into a high-yield way to get into commercial real estate.
Matthew Swibel

The icy residential market offers another silver lining for net-lease hunters. Until recently, soaring prices were prompting speculators to dump investment homes and swap into commercial real estate as a way of deferring capital gains taxes via so-called 1031 swaps. Over the past few years such deals drove a majority of net-lease volume and sparked multiple bids for many properties. Not anymore. "Now's a good time to be a buyer," says Michael Houge, a principal at Upland Real Estate Group in Minneapolis. "I have twice as much retail property for sale as six months ago, with higher-quality tenants, better locations and more aggressive sellers."

Click here to learn ways to get into this market.

Adviser Soapbox: Seven ETFs For Value Investors
These ETFs give you exposure to beaten-down sectors due for a comeback, but keep your bets spread out nicely.
George Putnam, Turnaround Letter

Sometimes you are confident that an industry group is poised for a rebound, but you are not sure which stocks to buy to best take advantage of that rebound. There is always the risk that a company-specific problem will prevent a particular stock from participating as its industry group rises. One way to avoid that risk is by buying a broad basket of stocks from across the industry, and one of the most efficient ways to do that is with an exchange-traded fund. Here's a look at ETFs that cover some industry groups that have been beaten up recently and where we think there is substantial rebound potential.

Click here for seven ETF recommendations.

Daily Trades: What If Oil Really Doesn't Hit $200?
If the ballyhooed $200 a barrel prediction fails to come true, here's how you can profit.
David Penn, TradingMarkets.com

For those of you who are out there wondering how to become famous overnight, here is the recipe: Find a hot market--anything that has doubled or tripled in value over the past year will do; create some crazy inflated "round number target" and release it to the press. Within a few days, you'll be everywhere. Oil is heading to $200! Ubiquitous! Especially this past weekend. But what if you don't want to be famous? What if you don't buy the hype? How do you profit from these prophets in case they're wrong?

Click here to find out.