July started off so promising and ended in the dumps. After the DJIA triumphantly closed above 14,000 it beat a hasty retreat scared off by a tumbling housing market, continued worries about sub-prime loans, record highs in oil prices, continued turmoil in Iraq and perhaps a dose of summer vacationitus. In addition, market darlings Apple and Google exited the month with a few unanswered questions. Nothing could be more telling than people speculating about a Dow 15,000...16,000...17,000 the moment it passed the 14,000 mark. And silly guy that I am...thoughts of repeating my 29% 2006 return entered my mind when I reached a 24% IRR earlier. That no longer looks like a possibility although I'm still doing fine - so far.

The month of July started off about stock picking and finished about stock picking as James Cramer of TheStreet.com would support. However, among the good picks were plenty of bad ones and anything remotely associated with housing, and sub-prime loans paid a heavy price by month end. Google maintained its leadership but did take a dive after reporting earnings. The Dow Jones Industrial Average (DJIA) set so many new highs that it is not news anymore, but then there was news, most of it bad enough to put doubt in investors minds, and the market traded down. Earnings reports still trickle in but nothing major unexpected affected the market. Mergers and acquisitions are showing some signs of slowing, but deals are getting done. This is my seventh follow-up report. For reference, check out my original Dec. 28, 2006 post on this topic.

Although the DJIA has been the market leader among the indices and may indicate that investors are giving large cap stocks their due, it has retreated lately. It also may indicate that the global economy is doing better as a whole than the national economy, creating opportunity for the multi-national corporations.

Summary of Results:

• Google Inc. (NASDAQ: GOOG) has made a strong move upward since my last report after starting up in January, being down for a while and back up. The last month has been more erratic but it did finish at $510.00, giving it a very respectable +10.26% gain though seven months of the year holding on to the top spot.
• My picks continued strong in the early part of the month then headed south managing a 5.41% gain through July. Adding the dividend portion of (2.89% x .58) of 1.68% brings the total return to +7.09%. Clearly dividends help and are making a noticeable difference when the returns are modest. Last month PetroChina Co. (NYSE: PTR) continued to hold up but Valero Energy (NYSE:VLO) which stayed my best over all pick did give back over 20% of it's gain. My other Chinese stock Huaneng Power International ADS (NYSE: HNP)remained a big gainer and slightly contracting from a 29% gain to just over 24%.
• Jim Cramer's average return on his nine picks was 5.63% after seven months dropping this month because of his optimism about the over all markets and weighting his portfolio accordingly. Adding the dividend portion (.66% x .58) of 0.38% brings Cramer's gain to +6.01%. Apple Inc. (NASDAQ: AAPL) continued to shine with the release the iPhone on June 29. There does not seem to be much that Apple can do wrong this year. Given new product and software launches and the continuation of current products and programs there is every reason to believe 2007 should be another one for the record books.
• The Indices all gave something back in July, with the DJIA, NASDAQ and S&P shrinking they still pegged gains on average of +4.2.%. Adding its portion of the dividend yield (1.8% x .58) of 1.04% brings it up to a total gain of +5.31% which if matched in the second half of 2007 would be a decent but probably disappointing year. The over all market seems to be losing out this year to the stock pickers.

Note that portional dividends have been added to the results. This is one of the criteria I use in my stock picks and it is having an impact on the results thus far. Only three of Cramer's picks pay dividends averaging about .66%; the Indices pay a higher average of 1.8%; my picks average still higher at about 2.89%; and Google does not pay a dividend. The flatter the market is this year the more the dividends will be a factor.

Google has not been the brightest star (or stock) this year wavering at times as more speculative stocks do, but it was the best bet last month and is this month as well. I still maintain that Value will beat Growth and 'indexing over the long run. Google will be the wild card! Two of my picks continue to be mentioned as buyout candidates but the rhetoric has died down considerably; The Dow Chemical Co. (NYSE: DOW) and The Home Depot (NYSE: HD). Home Depot continues to receive the most negative discussion in business circles these days although now the sub-prime loan mess is stealing headline space on a daily basis.

The following are the closing prices as of December 28, 2006 and seven month returns for the seven stocks I recommended plus the addition of Spectra Energy Corp. (NYSE: SE) that was spun out of Duke Energy (NYSE: DUK). Among Cramer's picks Kraft Foods (NYSE: KFT) which was spun out of Altria Group, Inc. (NYSE: MO), is included in the calculations

1. The Dow Chemical Company: $40.02 is UP to 43.48 (+8.65%) 3.54% yield
2. Duke Energy: $33.02 (incl. of Spectra Energry (NYSE: SE)) is Down to 29.82 (-9.69%) 4.31 yield
3. The Home Depot Inc.: $39.73 is Down to $37.17 (-6.44%) 2.31% yield
4. Huaneng Power International ADS: $36 is UP to $44.78 (+24.39%) 3.62% yield
5. PetroChina ADR: $142.12 is Up to 147.26 (+3.6%) 4.5% yield
6. Time Warner Inc. (NYSE: TWX) $22.00 is Down to $19.26 (-12.45%) 1.1% yield
7. Valero Energy: $51.61 is UP to $67.01 (+29.84%) 0.84% yield

The following index comparisons are also from December 28, 2006 :

• Dow Jones Industrial Average: 12,501.52 is Up to 13,211.99 (+5.68%)
• NASDAQ Composite Index: 2,425.57 is Up to 2,546.27 (+4.98%)
• Standard & Poors 500 Index ($INX): 1,424.73 is Up to 1,455.27 (+2.14%)

The Cramer Speculative Stocks for 2007:

1) Level 3 Communications (NASDAQ: LVLT) $5.66 is Down to $5.23 (-7.6%) No dividend
2) Rite Aid (NYSE: RAD) $5.49 is even to $5.51 (+.0036%) No dividend
3) Savient Pharmaceuticals (NASDAQ: SVNT) $12.01 is Down to $11.84. (-1.42%) No dividend

The Cramer Growth Picks are:
1) New York Stock Exchange Group (NYSE: NYX) $97.51 Down to $77.02 (-21.01%) No dividend
2) Apple Inc. (NASDAQ: AAPL) $80.87 UP to $131.76 (+62.93%) No dividend
3) Cisco Systems (NASDAQ: CSCO) $27.42 Up to $28.91 (+5.43%) No dividend

The Cramer Value Picks are:
1) Altria Group (NYSE: MO) $86.23 UP to $66.47 +(Kraft at .692024 x $32.75 = 22.66) to $89.13 (+3.36%) 4.12% Yield
2) Goldman Sachs Group (NYSE: GS) $200.80 Down to $188.34 (-6.21%) .72% yield
3) Halliburton Co. (NYSE: HAL) $31.26 UP to $36.02 (+15.23%) .97% Yield

The New Powerhouse Google

Wall Street darling Google is being tracked since it is of broad interest to the investing public and internet users alike. Google closed December 28, 2006 at $462.56. After an early rise in January it slid and was trading in a range between $440 to $480 but May was a breakout month and continued strong into June, lifting the trading range considerably and closing the month at $522.70. In July Google hit another all time high of $558.58 however a 3 cent earnings miss followed (based on analysts expectations) knocking the wind our of it's sails, sending it down about 10%. Since then it has found support at around $500 per share and ending the month at $510.00. for a solid YTD gain of (+10.26%). Google does not pay a dividend.

I will be reporting again during the week following the closing stock prices each month.

Disclosure: I own shares of DUK, HNP, PTR, SE, TWX, and VLO.

Those of you who are new to Bloggingstocks can check out my other stories and read Chasing Value or Serious Money to find more potential opportunities and verify my track record as well, including the stinkers.

Sheldon Liber is the CEO of a small private investment company and the vice president for design and research at an architecture & planning firm. Check out his other posts for BloggingStocks here.