I expect the Dow Jones Industrial Average (DJIA) will continue its upward trend in 2007 although not by the same margin that it did in 2006. On the other hand, I expect The Dow Chemical Company (NYSE:DOW) to beat the DJIA and be one of the success stories of the year. I outlined many reasons for this in Dow Chemical: a solid pick for 2007. Three weeks have passed since this story was published, but I am feeling even better about it today than I did originally.

I have already outlined the fundamental financial data, stock buybacks and dividends, but there is another trend that will contribute to stronger returns: The fall in oil prices, a major cost component in many of its 3500 products, is down by 30%. This should be a very positive influence on DOW's bottom line during the next few quarters. While lower oil prices reduce product costs, lower overall energy prices will also contribute to profits because DOW has major infrastructure as an old line company. Unlike services companies and Internet companies that keep plant and operations to a minimum, companies like DOW pay a penalty when energy prices go up and receive a benefit when they go down. It is as if they were running a brokerage account with margin leverage; the good times and bad times are exaggerated.

We have already witnessed James Cramer do an about face on technology stocks and he has started to turn more Bearish on the overall market after being all hyped up just two weeks ago. My picks will haunt me all year. I did not make one pick I could not live with, this year, and for the next ten.

Check out my other posts for BloggingStocks here. Be sure and read You don't have to be 007 to find the best picks for 2007!

Sheldon Liber is the CEO of a small private investment company and the vice president for design and research at an architecture & planning firm.

At the end of last year I selected The Home Depot (NYSE:HD) as one of my seven picks for the coming year in the post You don't have to be 007 to find the best picks for 2007! At the time I took notice of it my thoughts were reinforced by an article in Money Magazine by Michael Zivy, who also recommended Lowes as worthy of investment consideration.

Now, just over two weeks later, I have read many more similar reports touting the stock. No less than James Cramer of TheStreet.com, Barron's, Fortune, and more recently BusinessWeek wrote it up after the abrupt resignation of CEO Bob Nardelli. I am sure I have seen it discussed in other places too, but the point has been made. A crowd within the investment world has taken an interest in Home Depot stock. No such crowds have been reported in the actual stores.

Which is more important to the success of the company: more customers or more Wall Street players? In my own analysis I was looking at financial data and not trying to place any bets on when there might be a large positive swing in customer traffic. Are the investment world gurus (I'm not there yet) betting the stock rises because they are predicting more traffic, or is the stock going to rise in the short run even in the absence of customers simply because they say so? Short term the prognosticators do have an impact. Not only does the word on the street affect stock prices, but there are those that are leading global investment houses and placing real bets the stock will rise, so it must.

In the long run it will be customers and cash flow that will impact the stock price. And management decisions and the macro economy will impact customer flow. But, when I see a crowd I usually go the other way so I take pause to revisit my thinking on the subject of Home Depot. I am not fond of crowds but when they gather it is often worth knowing why. In this case I think my reasoning still has merit, so I will write this off to everyone jumping on the bandwagon. I do not claim to be the first one on the bandwagon, and do not know now when and if I will jump off. I will not be changing my seven picks during the year, so I guess I'm going along for the ride.

Check out my other posts for BloggingStocks here.

Sheldon Liber is the CEO of a small private investment company and the vice president for design and research at an architecture & planning firm.