The Timeline takes all of the social data that you and your friends have created over time and put it in chronological order – stringing together a series of updates, photos, wall posts, profile changes, events, and telling a story.

Last night while browsing through my Facebook timeline I was amazed by the emotions it provoked.  Looking through the ups and downs of life, the beginnings (and ends) of relationships, the events that have changed your life, and the places you have been over time is truly an amazing experience.  Facebook has managed to take all your social data and truly create something personal and beautiful.

Aesthetics aside, strategically this is going to be a major win for Facebook.  At a time when they are facing serious competition from Google+, this update not only differentiates their product but will make users want to share more – on Facebook.

The Timeline feature dramatically differentiates the Facebook product from any competing social network.  Amit Kumar writes,

It’s remarkable that Facebook recognizes that it’s responsible for defining the Vision for social networking – and understands in a very deep way that the product it ships is merely a manifestation of this vision. This remarkable self-realization will be the core issue Google+ will have to grapple with.

Products are merely manifestations of Company Visions

Every successful company gets to be that way through a combination of clear, overarching vision; methodical execution, and stellar, competent teams. While execution and team make a product sing, it’s really the vision that users and customer are ultimately buying.

Competitors, like Google+ in this case, have to contend with this dilemma – either build a product close to the existing product manifestation, or redefine the vision, and build a completely different product to serve that new vision.

Facebook has something that Google doesn’t – all your social data.  No matter how much Google wants to copy Facebook’s features and try to improve upon them, they will never have the last 5-6 years of your life in photos, updates, and relationships.  The Timeline feature exposes this weakness.  If Google+ came out with a Timeline feature tomorrow it would still be years before it would be as beautiful as Facebook’s.  With the Timeline feature Facebook seizes on a major scarcity.

The new Timeline feature also makes me, for the first time, want to share more – on Facebook.  As someone who has not been a major Facebook user, it was a bit sad to browse through my Timeline and see some holes where holes should not be.  It makes me wish I documented my life a little better on Facebook.  Facebook even leaves gaps for when Facebook wasn’t invented – and I’m pretty sure many people will find ways to fill in these gaps with old photos over time.

While I’m sure many people will complain about such a major shift in the product, over time I believe this will be just as big as when they launched the News Feed.  Facebook’s product team has gotten a lot of flack recently about sub-par launches, but the launch of the Timeline will truly be their “Apple-moment”.

(via ycharts)

I’m not so sure.

$GOOG  is being attacked from every angle.  When you sit back and ponder it, can you picture a company more under fire from competition from so many huge competitors?  Let’s examine…

Apple ($AAPL)

$AAPL is attacking $GOOG in the land that it does business – the web.  The same way $GOOG was instrumental in shaping the web, $AAPL has been instrumental in shaping the mobile web.  If you haven’t noticed, on the mobile web we use apps, not web browsers.  In fact as $GOOG is finding out with  its Chrome Web Store,  app stores work on the mobile web, not so much off of it.  While I’m not going to go as far as to say The Web is Dead, most certainly the web is different on mobile – its much more $AAPL’s web than $GOOG’s.

To illustrate the threat, think about how you find a restaurant on your computer versus how you find it on your phone.

On the web, when I’m hungry, I’m often search for a restaurant, type of food, and/or neighborhood and given (and frequently click on) Yelp as a search result.  While I’m on my way to Yelp, I see many ads for restaurants relevant to my search query.   On my phone, however, I have the Yelp app.  I don’t need to use $GOOG search.   $YELP has become my Google for restaurants.  Advertising dollars shift from $GOOG to $YELP.  $GOOG clients lost, $YELP clients gained. $GOOG knows this, which is why they tried to buy $YELP in 2009.

Facebook ($FBOOK)

With the movie out about it, your Grandmother on it, and a soaring valuation of it, $FBOOK has been all over the news.  It’s now emerging as “the Next Google”.  If you spent 5 minutes on $FBOOK this may seem laughable, however behind all the vampire requests and baby pictures there is something quite dangerous for $GOOG.

$FBOOK is trying to attack $GOOG as your central point of entry to web.  Facebook is essentially  ”Internet for Dummies”, written in PHP.  Your mom, dad, and friends who use Internet Explorer and land on a lame MSN.com default home page are actually entering the internet through Facebook.  Back in September, $FBOOK passed $GOOG in time on site.  This is important for $GOOG because where you are, is where you will search.  If you notice already, when you get to the end of a search result on $FBOOK, it gives you $MSFT bing results:

In addition, Facebook Places appears to be steadily taking off in my Facebook stream.  Geolocation is supposedly a major growth area for Google and Facebook, especially with their monopoly on identity, could snatch it.

The Content Farms ($DMD)

If you haven’t already noticed, $GOOG search results have become less useful lately as SEO-juiced content farms such as Demand Media ($DMD) have gone to great lengths to get their content to the top of search results.  While having Content Farm spam in search results may be short term profitable, $GOOG recognizes that usefulness and a good user experience is vital to it’s long term success.  This week, $GOOG drastically changed its algorithm to combat these have hacked  $GOOG’s algorithm (and perhaps revenue optimization model).  Since then, search results have improved.  Google has won the battle but I’m not too certain $GOOG has won the war.

As a potential investor, this Content Farm situation brings a ton of uncertainty, specifically leaving me with two questions:

1) Can Google combat Content Farms in the long run?

2) If Google beats out Content Farms, how will that affect it’s revenue?

To me it almost seems as a “damned if you do, damned if you don’t” situation for $GOOG.   The value investor would say that the price reflects this uncertainity and this is opportunity but I’m not so sure.  It’s a pretty tough situation for $GOOG.

Quora ($QUORA)

While I’m not a contributor on Quora, I am a lurker.  Often times during the day, I find myself going to Quora  for a search before I go to Google.  These searches are for work and often tech-related so Quora, having a deep set of Tech early adopters, is quite useful.  If it flourishes beyond its tech roots,  scales its community, and effectively fights spam, I can see Quora as a potential Google competitor.  I have never consciously by-stepped Google, until Quora.

Groupon ($GRPN)

I’m not as bullish on $GRPN as others are, but I can definitely see how it is hurting $GOOG.  Groupon is going after a major growth area for $GOOG – local businesses.  They are trying to reach you before you perform a $GOOG search, by sending you daily deals via email and becoming the Point of Sale.  They are even arbing $GOOG to get the business, buying up Google Adwords and flipping their “ads” via email.  The hilarious part of it all is, I access Groupon in Gmail, when Google should have made it a tab years ago.

Amazon ($AMZN)

Last year, Chris Dixon wrote an awesome post “While Google Fights on the Edges, Amazon Attacks its Core”.  He writes:

The key risk for Google is that they are heavily dependent on online purchasing being a two-stage process:  the user does a search on Google, and then clicks on an ad to buy something on another site. As long as the e-commerce world is sufficiently fragmented, users will prefer an intermediary like Google to help them find the right product or merchant. But as Amazon increasingly dominates the e-commerce market, this fragmentation could go away along with users’ need for an intermediary.**

While under the surface, Chris might have been touting the potential of Hunch, on the surface he makes a dead-on point.  As places like Amazon become the place to go on the internet to shop, why go through Google.  Think about the effect a Wal-Mart opening in town has on the local paper.

I’m sure I left off a few potential competitors out there, and feel free to chime in with others.

I’ve never seen a company with so much competition coming from so many angles.  These days, it’s tough being Google.

Couple that with the fact that Rosenberg is going a bit out of character with his take down of Meredith’s Whitney’s muni bond call and we have an anectdotal contrarian analyst’s dream playing out.

There are some who would regard an event like this as a contrary, bearish indicator.  Yesterday, I poked fun at this on StockTwits, as it happened to coincide with some enormous volatility (and rioting) in the Dhaka Stock Exchange in Bangladesh.   Kidding aside, I think the launch of FTtilt is quite bullish for Emerging Markets in general.

It’s my belief that capital flows towards information.  Despite their abundant resources and cheap capital, historically Emerging Markets have commanded an enormous valuation discount due to a lack of information.   Lack of information includes future political instability, economic uncertainty, financial infrastructure instability, as well as a general lack of media coverage.  Media coverage is important as most investors don’t live in these markets, and would be more willing to invest if there was media covering the events that affected the markets.

The investment in media and information infrastructure in emerging markets is bullish for the entire market.  We saw this as the digital age swept through the US markets.  While standard investor media was around, the internet brought new dimensions of market information to the average investor and increased his/her participation.  While it did not end so well for this investor,it no doubt resulted in a very bullish trend for quite some time.

The launch FTtilt represents a significant investment in such infrastructure.  It’s a major investment by a mainstream publication which no doubt will spur competitive reactions from others, potentially resulting in an upgrade of the entire financial media infrastructure.  Markets that were previously uncovered will begin to get covered, capital will flow to this information.  Markets will benefit from this capital flow, and there will be more investment in financial media/information infrastructure.

Feedback loop, repeat.

While obviously the “contrarians” could end up being right, and short term they may.  Long term, however, I’m quite bullish on the intersection of information and markets, and its economic effects and this is a significant intersection in some significant markets.

Also recently @Xiphos_Trading noticed the same thing.

If you’re not familiar with $PHYS it’s Sprott Physical Gold Trust, a Canadian closed end fund that invests in gold buillion (and unlike $GLD allows you to take delivery).  While I am not a gold bug, I do like to look at correlated assets for long-short opportunities.  Here’s the deal on $PHYS:

It’s trading at a 3.31% premium to NAV.  While $PHYS has only been trading since February, this is historically low:

My guess was that $GLD is probably a good proxy for NAV of $PHYS since it is liquid and runs with gold.  I ran the same analysis above on $PHYS vs. $GLD since inception:

As you can see while the magnitude of premiums are a bit different, the distribution is very similar.

While there is no fundamental reason for this fund to trade above NAV, it is very likely to do so.  I believe that there will be a perceived physical premium and its unlikely that there will be any “tests” of this structure in the near future.  Thus, the downside of such a trade is limited, in my opinion.

From a purely statistical perspective the Long $PHYS Short $GLD trade makes sense, but the past may not be the best indicator of the future.

On September 17th, Sprott did a follow on offering that priced I believe 10% above NAV.  They are using the proceeds of this offering to buy more bullion.  There’s a discussion of this over at Zero Hedge. Since the offering, the premium has been sucked out.  While it doesn’t appear that offering itself was dilutive, it increases the supply of this “physical” gold exposure and thus makes sense that it’s premium to NAV would get shrink.  The follow on was roughly 50% of the initial offering so for that 50% increase in supply we’re going to have to see a 50% increase in demand in the future just to get to the supply/demand mechanics that produced the historical data above.  A similar fund, $CEF, Central Fund is currently trading at 8% to NAV, so from a relative value standpoint, new demand for this type of exposure may get sucked into $PHYS, which could help a bit.

Also the historical data includes the “mini” Euro Crisis we had back in the spring and early summer.  Most of the high premiums were during that time period, when there was real fear about the future of the Euro.  Gold was looked to as a play in general currency instability back then and $PHYS commanded a premium during that time of fear. In short, the historical data is limited and could potentially contain a major outlier.

While I believe the downside is limited in such a trade, I’m not sure how much upside there is after you take out the cost of putting on and carrying such a position.  With $CEF trading at 8% premium that’s the ceiling I would give for upside (5%) in the current environment.  Should we have renewed currency fears or continuing erosion of this spread, however, the trade may get more interesting and I’ll reevaluate.

Regardless, hopefully this analysis was a testament to not relying solely on charts, or historical or statistical data when looking at pair trades – because sometimes it’s just so tempting.

The square root-shaped recovery was first brought to mainstream attention regarding European recovery in a Merrill Lynch note in May 2009.  From FT Alphaville:

The “square root” scenario is becoming quite popular, with a sharp initial recovery followed by a levelling off halfway down the road. This probably fits our Eurozone scenario best. Except, we do not believe that the initial recovery will be followed by semi-stagnation, as the “square root” implies. We merely look for some modest loss of momentum once the initial mechanical bounce-back has run its course.

Later in September, it started gaining some traction and Schwab’s Liz-Ann Sonders applied it to the US recovery.  Below is a Tech Ticker from September 2009, of her discussing this:

Since this dicussion, the square root-shaped recovery talk has basically died.  This isn’t surprising because as you get up towards the “flattening” part of a square root, its not really too exciting for people to say “we’re going nowhere”.  It’s much more sexy to say we may go back into recession or we are going back to 2006.  But two leading indicators are the stock market, and the Conference Board Leading Economic indicators are starting to look square root in shape.

While it’s somewhat early to tell, many people are debating lagging and coincident indicators but leading indicators are starting to spell out the square root case.  Unfortunately,  it’s not too hip to be square (root-shaped) these days.

The square root-shaped recovery was first brought to mainstream attention regarding European recovery in a Merrill Lynch note in May 2009.  From FT Alphaville:

The “square root” scenario is becoming quite popular, with a sharp initial recovery followed by a levelling off halfway down the road. This probably fits our Eurozone scenario best. Except, we do not believe that the initial recovery will be followed by semi-stagnation, as the “square root” implies. We merely look for some modest loss of momentum once the initial mechanical bounce-back has run its course.

Later in September, it started gaining some traction and Schwab’s Liz-Ann Sonders applied it to the US recovery.  Below is a Tech Ticker from September 2009, of her discussing this:

Since this dicussion, the square root-shaped recovery talk has basically died.  This isn’t surprising because as you get up towards the “flattening” part of a square root, its not really too exciting for people to say “we’re going nowhere”.  It’s much more sexy to say we may go back into recession or we are going back to 2006.  But two leading indicators are the stock market, and the Conference Board Leading Economic indicators are starting to look square root in shape.

While it’s somewhat early to tell, many people are debating lagging and coincident indicators but leading indicators are starting to spell out the square root case.  Unfortunately,  it’s not too hip to be square (root-shaped) these days.

Suspect One: China Sky One Medical ($CSKI)

Last Friday, $CSKI cut 2010 guidance.  From Reuters:

China Sky One Medical Inc., a Chinese over-the-counter drug maker, said Friday several major distributors have stopped doing business with the company, and it cut its 2010 profit and sales expectations.

The company said several major private distributors chose to end their relationships with the company because they learned that China Sky One is required to disclose information about their business in filings with the Securities and Exchange Commission. According to China Sky One, the distributors said the disclosures led to greater scrutiny of their businesses by Chinese government regulators.

Sounds fishy to me.

Suspect 2: China Northeast Petroleum Corp ($NEP)

Back in May $NEP was halted and delisted from the AMEX for misstating financial information.  Recently the stock has reopened down 15% and almost 60% off it’s 2010 high.

Suspect 3: China AgriTech ($CAGC)

Last Wednesday, $CAGC was killed after an Chardan Capital Markets raised concern regarding their auditors.

From TheStreet:

Shares of China Agritech(CAGC) were walloped Wednesday with volume running more than five times the usual churn as its auditors — past, present and future — suddenly became a hot topic on Wall Street.

The main driver for the selling was a downgrade by Chardan Capital Markets, a New York-based investment banking firm that focuses on the micro, small-cap and mid-cap markets.

Citing concerns about the company’s past auditor relationships and its ongoing earnings quality, the firm lowered its rating on China Agritech to sell from neutral and brought its 12-month price target down to $9 from $14.

What do these three companies have in common?  The word “China” in their name.

Below is a spreadsheet of 40 companies with the word “China” in their name.  These were selected by doing a Yahoo Search for companies with the word “China” in their name that trade in the US and dropping out any OTCBB stocks.

If you notice, these stocks have gotten killed over the last month. The average return of a stock with “China” in its name over the last month is -5.63% versus -1% of the $SPY (and about the same for the $FXI). The median return of a stock with “China” in its name is -9.12%. Over the last 3 months, they have been lagging as well.

Is it silly to perform this analysis? Not really. Back in the late 1950′s there was a boom in “Tron” or “Tronics” stocks.

From Forbes:

With the dawn of the space age, every electronics stock suddenly took off like a rocket on Wall Street, reaching valuation levels not unlike Internet stocks today. And just like a “dot com” can help an obscure offering surge into the stratosphere today, the key to a stocks success could often be found in its name in the 1960s as well.

“I call it the tronics boom because these soaring stocks usually had some form of tron or tronics in their name,” says Malkiel, citing such “trons” as Astron, Dutron, Vulcatron and Transitron and “onics” like Circuitronics, Supronics and Videotronics, as well as one company that, for good measure, put together the winning combination Powertron Ultrasonics.

Then, like now, the demand was huge but the IPOs were relatively thin, so that stock prices would soar at the launch.

Investors argued that “tronics” stocks couldnt be valued according to traditional methods because they represented a whole new era of the economy that was nothing like the past. Promoters entered the stage to talk the stocks up further. As a result, stocks soared to multiples of 50, 100 or even 200 times earnings.

But in late 1962, “tronics” stocks and other growth issues came crashing down in a massive sell-off.

Wall Street is a business of sales.  The easiest way to get uninformed investors to invest in China is to throw “China” into the name of the stock.  Back during the aforementioned “Tronics” companies were changing their name to something with “Tron” or “Tronics” in it just so people would buy their stock. @Legacy_Trades calls this investing in “fake China” and has been very adamant on the StockTwits stream about these companies.

Even if you believe in China as a growth area for investing, you must watch out for companies looking to piggy-back this growth.  When the fundamentals are too good to be true, usually they aren’t.

Suspect One: China Sky One Medical ($CSKI)

Last Friday, $CSKI cut 2010 guidance.  From Reuters:

China Sky One Medical Inc., a Chinese over-the-counter drug maker, said Friday several major distributors have stopped doing business with the company, and it cut its 2010 profit and sales expectations.

The company said several major private distributors chose to end their relationships with the company because they learned that China Sky One is required to disclose information about their business in filings with the Securities and Exchange Commission. According to China Sky One, the distributors said the disclosures led to greater scrutiny of their businesses by Chinese government regulators.

Sounds fishy to me.

Suspect 2: China Northeast Petroleum Corp ($NEP)

Back in May $NEP was halted and delisted from the AMEX for misstating financial information.  Recently the stock has reopened down 15% and almost 60% off it’s 2010 high.

Suspect 3: China AgriTech ($CAGC)

Last Wednesday, $CAGC was killed after an Chardan Capital Markets raised concern regarding their auditors.

From TheStreet:

Shares of China Agritech(CAGC) were walloped Wednesday with volume running more than five times the usual churn as its auditors — past, present and future — suddenly became a hot topic on Wall Street.

The main driver for the selling was a downgrade by Chardan Capital Markets, a New York-based investment banking firm that focuses on the micro, small-cap and mid-cap markets.

Citing concerns about the company’s past auditor relationships and its ongoing earnings quality, the firm lowered its rating on China Agritech to sell from neutral and brought its 12-month price target down to $9 from $14.

What do these three companies have in common?  The word “China” in their name.

Below is a spreadsheet of 40 companies with the word “China” in their name.  These were selected by doing a Yahoo Search for companies with the word “China” in their name that trade in the US and dropping out any OTCBB stocks.

If you notice, these stocks have gotten killed over the last month. The average return of a stock with “China” in its name over the last month is -5.63% versus -1% of the $SPY (and about the same for the $FXI). The median return of a stock with “China” in its name is -9.12%. Over the last 3 months, they have been lagging as well.

Is it silly to perform this analysis? Not really. Back in the late 1950′s there was a boom in “Tron” or “Tronics” stocks.

From Forbes:

With the dawn of the space age, every electronics stock suddenly took off like a rocket on Wall Street, reaching valuation levels not unlike Internet stocks today. And just like a “dot com” can help an obscure offering surge into the stratosphere today, the key to a stocks success could often be found in its name in the 1960s as well.

“I call it the tronics boom because these soaring stocks usually had some form of tron or tronics in their name,” says Malkiel, citing such “trons” as Astron, Dutron, Vulcatron and Transitron and “onics” like Circuitronics, Supronics and Videotronics, as well as one company that, for good measure, put together the winning combination Powertron Ultrasonics.

Then, like now, the demand was huge but the IPOs were relatively thin, so that stock prices would soar at the launch.

Investors argued that “tronics” stocks couldnt be valued according to traditional methods because they represented a whole new era of the economy that was nothing like the past. Promoters entered the stage to talk the stocks up further. As a result, stocks soared to multiples of 50, 100 or even 200 times earnings.

But in late 1962, “tronics” stocks and other growth issues came crashing down in a massive sell-off.

Wall Street is a business of sales.  The easiest way to get uninformed investors to invest in China is to throw “China” into the name of the stock.  Back during the aforementioned “Tronics” companies were changing their name to something with “Tron” or “Tronics” in it just so people would buy their stock. @Legacy_Trades calls this investing in “fake China” and has been very adamant on the StockTwits stream about these companies.

Even if you believe in China as a growth area for investing, you must watch out for companies looking to piggy-back this growth.  When the fundamentals are too good to be true, usually they aren’t.