6 Things I Watched for in 2008

It's not fair for me to spend December rattling off predictions for the year ahead without checking back on my own work.

In early January, I wrote out six things that I expected to happen in 2008, and I'm no runaway psychic. I'm here. I'm accountable. Let's dig in.

1. E*Trade will find a suitor
Did online broker E*Trade (Nasdaq: ETFC  ) fall into a rival's arms this year? No. Thankfully for shareholders, it didn't have to. Despite the heady turbulence behind the company's mortgage exposure that threatened to off the company in late 2007, E*Trade bounced back after its popular talking baby ads began airing during February's Super Bowl.

E*Trade may not be a world beater at the moment. Its shares are being exchanged for pocket change. Its latest quarterly report fell short of Wall Street expectations. However, the company has been growing its account base after a brief step back last year.

It wouldn't surprise me to see a buyout in 2009, given the nature of consolidation in the brokerage industry, but I clearly missed on this one.

2. The January Effect will be the January Defect
"A healthy first month for stocks is historically a precursor to a healthy year," I wrote nearly a year ago. "I think this year will break from the plan."

I was wrong here, too. I was banking on a sluggish start in January to be the exception to the rule. It wound up being the rule.

3. The CEO bloodbath is just beginning
I was right on this one, and it wasn't just CEOs of battered financial services companies that took hits. Changes at the helm were also announced for dot-com heavies like eBay (Nasdaq: EBAY  ) and Yahoo! (Nasdaq: YHOO  ) .

4. Google will finally get to double down on DoubleClick
This one is a layup in retrospect, but there really was European resistance building to Google's (Nasdaq: GOOG  ) $3.1 billion purchase of DoubleClick as 2007 came to a close.

Companies like Yahoo! and Microsoft (Nasdaq: MSFT  ) did their best to scare regulators into believing that Google was getting too powerful for its own good, even after they themselves had been gnawing on huge acquisitions.

It still wasn't easy. European regulators finally gave the deal its blessing in March, 11 months after it was originally announced. It actually set a bad precedent domestically, when stateside regulators took even longer to clear the Sirius XM Radio (Nasdaq: SIRI  ) merger that was announced two months before the DoubleClick deal, but wasn't approved until this past summer.

5. Amazon will continue to grow faster than the e-tail market
"I see the growth rate at Amazon finally decelerating in 2008," I wrote. "The bar is just too high. Still, I see Amazon growing faster than the e-tail market as a whole."

I nailed it on both counts. Growth did slow at Amazon.com (Nasdaq: AMZN  ) , but the company continues to power past the market. Between its growing reach of third-party merchants and its sticky Prime memberships offering subsidized shipping, Amazon actually grew its holiday sales; meanwhile, dot-com market watchers are projecting a dip in e-tail.

6. Yahoo! will beat the market
There were several clairvoyant bits in my final prediction for 2008.

  • "I stand by my prediction that it will join forces with Microsoft later this year."
  • "Yahoo! will finally beat the market averages in 2008."
  • "It may not close out the year with Jerry Yang at the helm."

Microsoft made its buyout bid three weeks later. Yang did announce his resignation, though my prediction of Sue Decker being tapped as CEO is highly unlikely at this point.

Did Yahoo! actually beat the market, though? Let's break out the measuring stick. It was a rollercoaster ride for Yahoo! with the Microsoft tugging, but the end result is that Yahoo! is trading 49% lower as of last night's close this year. The Nasdaq Composite has shed 43% of its value. This isn't really "too close to call" so I'll go ahead and concede defeat, though I'll have to pat my own back for calling Microsoft's takeover play and Yang's departure.

Other stories to read before the ball drops:

Microsoft is a Motley Fool Inside Value recommendation. Google is a Motley Fool Rule Breakers selection. eBay and Amazon.com are Motley Fool Stock Advisor recommendations. Try any of our Foolish newsletters today, free for 30 days.

Longtime Fool contributor Rick Munarriz doesn't mind taking out the crystal ball from time to time, if only to dust it for fingerprints. He does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.


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