Microsoft Corp. (NASDAQ: MSFT) Chairman Bill Gates -- net worth: $59.2 billion -- is no longer the world's wealthiest person. According to the HeraldSun, Mexico's Carlos Slim -- net worth: $67.8 billion -- now sits in that throne. In April, Slim surpassed Berkshire Hathaway Inc.'s (NYSE: BRK.A) CEO Warren Buffett as the world's second richest person. And today, Slim surpasses Gates.

How must Gates feel? I don't know. He has commented in the past that he doesn't think about being the world's wealthiest person much. But he has occupied that throne since 1995. After 12 years, there could be a twinge of regret at having lost the crown. But Gates still has plenty of money, particularly since Buffett contributed a huge chunk of his fortune to Gates' foundation.

Meanwhile how did Slim climb so fast? A 27% surge in the share price of America Movil (NYSE: AMX), Latin America's largest mobile phone operator controlled by Slim, from March to June enabled Slim to surpass Gates by $8.6 billion. The 5.7% increase in Microsoft stock in the second quarter was no match for the sharp rise in valuations of Slim's companies. He also owns shares of Telefonos de Mexico (NYSE: TMX) up 11% and Grupo Financiero Inbursa S.A. (MXK: GFINBURO) up 20%.

While I don't have earnings forecasts to evaluate Inbursa, it's not too late to consider buying in to Slim's other companies.

• American Movil. AMX's PEG of 1 -- based on a P/E of 26.2 on earnings growth of 26% to $4.22 in 2008 -- looks reasonable to me.
• Telmex. TMX's PEG of 2.5 -- based on a P/E of 12 on earnings growth of 4.9% to $3.31 in 2008 -- looks expensive to me -- I'd avoid this one.

It's not every day that a king gets dethroned. The market is sending a signal that might be worth heeding.

Peter Cohan is president of Peter S. Cohan & Associates, a management consulting and venture capital firm. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned in this post.

Last year the stocks mentioned in my newsletter, The Cohan Letter, were up 15%, 1% better than my benchmark, the S&P 500. But it was a humbling year, so I offer three stock picks for 2007 with a suggestion that you study them carefully.

2006 was humbling because my picks (I focus on three stocks in each monthly edition) trailed the market throughout much of the year. However, they ended up prevailing due to a late December surge in some of the top performing stocks -- e.g., Telefonos de Mexico, S.A. (ADR) (NYSE: TMX) was up 36% from $20.83 when I first mentioned it to $28.26 and Wal-Mart de Mexico (ADR) (OTC: WMMVY) rose 28% from $34.25 (I blogged about it here) to $43.85. This was due to portfolio managers' practice of window dressing -- buying stocks that have done well right at the end of the year so they can report to their shareholders that they owned the stocks.

Since 1998, when public sources began tracking my stock picks, I've been fortunate to have outperformed the S&P 500 in all but one year (in 2003, my stock picks were up 23% compared to 29% for the S&P 500). Since 1998, my stock picks have averaged a 67% annual return compared to a 6% return for the S&P 500. However, 2006 was by far the worst year for my stock picks -- the second worst was 2004 when my picks were up 20% compared to 9% for the S&P 500.

One of the key reasons for these results is limiting losses through a 2% stop loss on stocks mentioned in The Cohan Letter -- if a stock's price falls 2% below the level at which it was noted, the stock is sold. To put the importance of this rule into context, I used it to dump 61% of the 36 stocks highlighted in 2006. Without it, my stock picks would have lost money for investors.

So it is with a serious helping of humble pie that I offer these three stocks to consider for 2007: