There is panic people. You can choose to Panic or you can do as I do everyday and repeat after me…’I am TOO small to FAIL!’

Here is Wikipedia on Panic (you can’t trust Wikipedia though according to CalacANUS). Jason would prefer you to be on his closest 7,000 friends email list to get his version of panic.

Here are all the finance Books you can quickly read on the subject.

In fact, ‘Panic’ in my headline would be way better for Google juice, but that’s not this blog is about.

There is not much really useful to say in the middle of the PANIC that is upon us. I am in it with everybody else and trying to shut out as much noise as possible. I was at Kol Nidre services with the family and was expecting the sermon to be about PANIC. I was PANICKED about having to sit through it. In the end I missed the sermon as we left before it came, my first blessing for being in the ‘good’ book (Note to Rabbi’s – If you want an awake audience or any audience for your sermon, squeeze it in early). But I digress…

Panic is infectious. It’s a virus that will run it’s course, but each one is different. Rest assured THIS panic is the MOST talked about one before it ever happened, yet still so few have avoided the damage . How can it be that such a well documented debacle could cause such massive damage (the IBD mutual fund index is down 40 freaking percent this year).

This is a once in an investing life time panic ALREADY in it’s breadth and off the chart readings on a daily basis . To call an end to this would just be luck and therefore off limits here.

Here is why panic spreads. Otherwise smart people, who on the surface think they are calm, freak everyone out with their own passive aggressive panic. If you don’t believe me, Sequoia and Uber angel investing guru Ron Conway are just now writing letters to all their CEO’s and giving them advice on how to survive . I mean today?

No offense, but get over yourselves.

If you have a good business, these letters are ridiculous in the timing. Maybe force them to read this letter upon funding and make them memorize it, but at this point, it reeks of panic and fear.

I have been telling any of the CEO’s that will listen to me, to THINK about how we turn this panic into an opportunity. We all have weak investments and weak CEO’s, but a blast email on October 7th is absurd. Anyways, I am poor and they are rich, so that’s that. So while the rest of the world panics, you can panic too, or you can take a few steps back and remember how fortunate you are to be reading this blog, because if you are, you are ‘Too Small to Fail.’ So what do I mean by that?

I can’t fire myself. I am nimble and lean and have a plan. I see this panic and I want to think about the afterbirth of it. Panic’s end. If you are smart and a little lucky, you will survive in good stead and historically, great things happen. If you don’t believe me, take a look at this chart from my friends at Blackstar (I have an investment in their fund). We are in the worst 12 month rolling period of returns since 1937. If you look closely…what follows is investing NIRVANA (click below to enlarge)

dow_12month_rolling_return.pdf

In that spirit, put aside the panic for a moment and consider these possibilities:

DOW 20,000 during the Obama presidency (assuming he wins, otherwise Dow 1,000 and stop reading :) )

Bull market in financial companies no one has ever heard and a new industry no one knows about right now

Post war economic boom

Democracy and capitalism thrives in Iraq

America regains the respect of the world again via financial crisis leadership management success

Bull market in the dollar

Berkshire Hathaway will triple from here

Higher capital gains tax, lower payroll tax, and a lower fiscal deficit

Better internet porn (this one is pure bait to get me to actually post all the other ones here…and it worked)

Buffett will be the treasury secretary in 2009 or have a major role

U.S. taxpayers get all their bailout money back w/ interest

Regulations of credit default swaps which will be traded on the CME

The hedge fund industry gets bigger with fewer players

Does that mean you should bet the farm now?

NO

Does that mean you should not do what Cramer says and sell everything in common stocks you need to pay for a renewed subscription to TheStreet.com?

NO

I am not here to hold your hand and say everything will be hunkeedoree. This blog is not called ‘Your Mommies Bosom’ (although Note To Self: great Google Juice). You need to gut up, and know what your risk tolerance is. If you don’t, the market will bust you up.

I will tell you that I have been buying. I will be buying tomorrow again. I am too early so far, but I have a plan…and I am ‘Too Small to Fail!’

The bears are passing around this link about Countrywide having RECORD amount of homes for sale on their website . In China, with 100 cities of 5 million people or more and no dentists, but a first taste of what money is….they could give a Kung Pao about Dell and Countrywide. They think stocks only go up.

THE BEARS are always too adamant. They never are happy with FAST, Quick profits. They will break your accounts despite being right occassionally because the end of the world is a sucker’s bet.

So are 10 team parlays (3-team parlays for that matter), but people love them.

The bull advantages are just too great.

Even though we know Dell sucks and Sirius sucks and Countrywide is broken and Citibank is a mess, the market screams higher today. Even if you are right on these, what’s the freaking point. It’s better just to make fun of them and the diligent shareholders screaming value than waste you time, energy and money gaming their next move.

The bears/shorts need to start thinking less and being more lazy to really make money.

Money managers, especially the big ones, are the laziest motherf$%ckers on the planet. They KNOW they can’t beat the indexes and all the ‘real’ money goes into marketing and legal.

When the market is good, the big money monagaers, the obnes that dominate the market price action these last 10 years, they buy the leaders, when the market is bad, they buy the leaders and when the market is going nowhere, they buy the leaders. If they raise too much money, they hire 20 marketing people to sell more of their crap fund and just two junior analysts to justify buying Dell and CFC as value plays.

If the market gets bad for too long…they sell the leaders last to raise cash because that’s where they can raise it. That’s why the leaders always get killed near the end of a selloff. That’s why you watch the all-time high list in bad markets. Outlazy, the lazy.

Too watch anything BUT the leaders is therefore too much work and that’s why the strategy works. The smart people are too smart and they are not watching the right stocks.

Here is what the dumb, lazy people (including myself) are printing money in day after day.

Apple – AAPL

Rick’s Cabaret – RICK

RIMM

Dolby – DLB

Chipotle’s – CMG

Google – GOOG

First Solar – FSLR

Don’t overthink it. These companies all absolutely own their categories. Money managers are lazy. Especially the big ones which truly dominate market price action. They either own crap like Dell or the all-time high list. Your advantage is you are not an idiot and you have limited capital, and therefore don’t have to own Dell.

Disclosure – Long all the above.

This year, just the themes I will be watching.

1. Commodities – For 2007 my focus will be more on water.

2. Mergers – a continuation of this trend. Bigger and Bolder and more egotistical than ever!

3. More IPO’s – I think entrepreneurs will show more balls this year and stop building to sell and start building to BE SOMEBODY! Update – Here is a recap of 2005 and 2006 IPO numbers.

4. Handheld Wars – NOT Music – Apple won that!

5. Internet – I will defer to Fred Wilson’s posts on 2007 themes. You should too.

6. Healthcare – This area of the stock market is sure to have some major winners. Sleep, Biotech, Infectious Disease. It would be great to see some major breakthroughs in 2007.

7. Inflation or Deflation – While that ridiculous debate continues that no one wins, I will focus on how can I make money off the areas of inflation and the areas of deflation in the global systems.

8. The Tapped Consumer – I am tapped. The average consumer is way past tapped. I am not shorting stocks, but I am tempted in stocks that are a play on the tapped consumer.

9. Porn – No explanation needed :) .

10. Broadband Internet Video. Yes – Fred is the internet guru in my eyes, but I feel I have some expertise here and there is likely to be some major busts and new winners in this space in 2007 and beyond.

1. News Corp. buying MySpace

2. Google Buying YouTube – Yes it’s early, but Google is up 25 plus percent already. They could spin it off :) .

3. EBay buys PayPal

4. Yahoo acquires Inktomi

5. Yahoo acquires Overture

6. Adobe buys Macromedia

UPDATE – 7-10 – Cisco, Microsoft, Yahoo, Amazon, Sun Microsystems etc..have made hundreds of good acquisitions that they have either sat on, screwed up or not integrated in a way that gets them noticed here. So I dedicate the last four to all the great internet businesses that were acquired and never heard from again once they went into the bowels of The Nasdaq’s last leaders.

Ashkan at WatchMojo just blogged his 10 best Internet Acquisitions of All Time . I agree with most of them.

Eddie from The Rad Report offers a new one that I am considering which is Akamai buying Speedera.

It is so hard to do a great acquisition. There are so many moving parts and integration issues. Further, the best time to do acquisitions is when no one wants to do them. Apple, Yahoo, Akamai, Amazon, MicroStrategy – talk about bargain basement prices 3-4 years ago.

I was just reading an excellent post over at Bellwether titled “The Top Ten WORST Internet Acquisitions Ever.” Also a great blog!

I wish I had thought of it and thanks for the hat tip to Darren Herman . Also a great blog. He is one of BusinessWeek’s Top Under 25 year old entrepreneur.

I think you can learn so much from these “worst” acquisitions. When they were being done, the management’s were being loved and adored by their peers and the media for their boldness and vision. Everyone was happy. These acquisitions happen in “up” markets. Confidence is high, prices are rising, bankers are eager and management ego’s are in full force.

Here they are. Read the comments to Bellwether’s post as well.

So, here is Bellwether’s highly subjective list of the 10 worst Internet acquisitions of all time:

10. Hotmail – acquired by Microsoft in 1998 for about $400 million. Hotmail was a second-tier free email service when Microsoft bought it and the acquisition did little to improve Microsoft’s internet portal ambitions.

9. Skype – acquired by eBay in September 2005 for $2.6 billion. While it’s early to call this one an absolute dud, eBay does not seem to have a plan – or at least a plan that would justify the acquisition price – for how to integrate Skype’s calling service with the core auction business.

8. MySimon – acquired by CNET in 1999 for $700. The price comparison site mySimon was supposed to launch CNET into lots of non-tech verticals – not a bad idea at the time. Unfortunately CNET had no idea how to effectively integrate mySimon and it’s now withering away, surpassed by newer, shinier price comparison engines.

7. BlueMountain.com – acquired by Excite@Home in 1999. $780 million for an online greeting card site. ‘Nuff said.

6. Lycos – acquired by Terra Networks for $4.6 billion in 2000. Yeah, I never heard of Terra either. The warning bells should have gone off when the deal was originally announced in May 2000 at a value of $12.5 billion, only to fall by more than 50% by the time it closed in October of that year because each company’s stock price was plummeting.

5. Netscape – acquired by AOL in 1998 for $4.2 billion. To be fair, this was a mercy acquisition. By the time AOL bought the company, Netscape had been humbled by Microsoft’s free Internet Explorer browser. AOL clearly had no plans for Netscape and as a result the once pioneering company is now an afterthought.

4. GeoCities – acquired by Yahoo! in 1999 for $3.56 billion. When was the last time you visited a site with a geocities.com domain? I can’t remember either. Shortly after the acquisition, innovation on GeoCities appears to have ground to a halt. GeoCities could have been mySpace, but the entire social networking revolution passed them right by.

3. Excite – acquired by @Home in 1999 for $6.7 billion. Remember Excite.com? Remember how it was the #2 or 3 portal for awhile? Well, a whole year and a half after the cable company @Home acquired Excite (for $394 per user!) in January 1999, the combined entity filed for bankruptcy never to be heard from again. Classically disastrous.

2. AOL – merged with TimeWarner in 2000. This one is obvious. While Time Warner finally seems to be turning things around at AOL six years after the fact, this merger was doomed from the start. Shortly after the merger AOL’s business started falling apart fast, with TimeWarner holding the bag. There was never a coherent integration plan and all that talk of synergy is – thankfully – dead and gone.

1. Broadcast.com – acquired by Yahoo! in 1999 for $5 billion. Yahoo! paid a mind-boggling $710 per user back in the hey day of the bubble. But why does this rank higher than the AOL boondoggle? Two words: Mark Cuban. Yahoo’s ludicrous overpayment for Broadcast.com gave Cuban the money to go out and buy the Dallas Mavericks basketball team and permanently implant himself on the American psyche. Unforgivable.

My 2 cents – Nothing comes close to Time Warner Buying AOL. Steve Case pulled the greatest merger coup of all time. Every other deal was sold by entrpreneurs that “thought” their business was worth the price. Steve Case knew he had to get out while the getting was good so he had to make that happen like a magician.

I am watching Apple, Google, Adobe and RIMM. They are my four Nasdaq horsemen. If they hold their all-time high breakouts, I am not on CODE RED. I am keeping it simple.

I am uncomfortable – that’s good.

I am expecting to get shellacked – that’s good.

December is always great – that’s good (I think :) )

I am not excited – that’s good.

I am taking partial profits on stocks that are moving too fast too high (empirical only) like CROX and RIMM – don’t know if that’s good or bad, but I don’t look back anymore. A profit is a profit.

I am adding fresh breakouts.

I am adding some Wipro (WIT) to my account at the next available open. I have owned a little for a while and rode it down during the India swoon this summer but was not stopped out. Today it busted out to an all-time high. The India closed end fund is still 20 percent plus below all-time highs. I like that relative strength.

My faves (everybody has favorites):

Apple – always
Adobe – lookin’ good with flash
Malyasia (EWM) – no good reason :) but I have been here for a while and she is starting to work nice.
Rentrak (RENT) – my fave chart. The pricks at headquarters are denying Lindsay an interview for Wallstrip. That’s a big negative.
Wipro (WIT) – a little volume and this becomes my fave chart
Bidu – pure aggression
Chipotle’s – all-time favorite restaurant. Lines getting bigger. I have a big profit but am staying!
Valueclick – No one can explain to me in english what they do. I like that :) .
SIGM – Great chart and Industry leader in living room CHIPS, BUT a component play so one foot out the door always.

My longshot busted stock that I still own is Navteq (NVT – GPS industry)

My next year stories – Gold and Oil. Sounds smart and safe.

Disclosure – Long everything listed here except Google (ugh) ! I will never own Pfizer though likely need their drugs.

I don’t believe in “Best Of” lists, but Business Week flexes it’s muscle by publishing a few more about the
Web and Bloggers . Lists work great – for the Publishers of them :) . Followed only by contests as a way to attracts readers and comments. Proof – the two most commented posts I have published are my Top 10 Reasons you are addicted to the stock market and my “Paired Trades Contest” (which I continue to lead – thanks to Apple).

I have very small ideas , especially as it relates to the stock market , but my friend Roger has “big” ones :) .

Nevertheless, Roger, Business Week and all the “hootie tootie” best of in Business Week are not thowing a Bender in New York this Friday. All “hootie tooties” are welcome.