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Heads-Up: A Skull And Crossbones

It's the universal sign for poison, and soon the skull and crossbones will be used to identify toxic stocks, too. As part of an effort to disclose more information to investors in the most obscure corner of the over-the-counter market, on Aug. 1 Pink Sheets will start assigning icons that reflect the riskiness of stocks listed on its Web site,

The symbols will reflect the degree of public disclosure a company has made. For example, a stock emblazoned with a pink check mark indicates that the issuer has complied with all standard Securities & Exchange Commission disclosure requirements. A yield sign means limited information is available, a stop sign says there's no information, and a skull and crossbones warns of danger.

The prevalence of e-mail "pump-and-dump" schemes was the impetus for the system, says Pink Sheets CEO Cromwell Coulson. In such ploys, scammers target unknown penny stocks and send out millions of e-mails promoting them. When unsuspecting investors cause the prices to surge, the scammers dump their shares, take their money, and run. "It's an awful group [of stocks], and by labeling them clearly, we are going to make the market much more efficient," Coulson says. By flagging deadly listings, he hopes to give investors and brokers an easy way to avoid them and help regulators crack down on e-mail fraud.

Google (GOOG) has its doubters, but Cowen & Co. analyst Jim Friedland isn't one of them. Where others see Google losing market share to rivals such as Yahoo! (YHOO) and Microsoft (MSFT), Friedland, in a report released on July 11, predicts that Google will grab a 90% share over the next 10 years. He spoke with Personal Finance writer Ben Levisohn about his call:

Why will Google amass a near-monopoly?

We estimate that for every $2 Google is putting toward research and development, Yahoo is spending $1. For every $1 Microsoft spends, Google spends $1.15. The trajectory of Google's R&D growth is much higher. Everybody's products keep improving, but every day, Google widens the lead.

Google's stock price is up 550% since its IPO three years ago. Can the shares, now around 550, go higher?

If we're right, and Google is essentially going to marginalize all of its competitors, the value of the opportunity is not reflected in the stock. [While he won't give a price target, based on his 2008 earnings estimate of $20 a share and a price-earnings ratio between the 2008 consensus of 29 and the current 36, the shares could span 580 to 720 next year.] If you went back to 1992-93, when Microsoft's stock was already up substantially from its IPO, there was a lot of controversy about the company. If you bought the stock then for 80, it's up 1,100% [accounting for five splits].

Do you think Google will split the shares?

The chance of them ever splitting the stock is extremely low. If you read the founders' letter in the initial public offering prospectus, you see that management views the world much the way Warren Buffett does, and he has never split shares. Berkshire Hathaway (BRK) A shares sell for more than $100,000 apiece. From Google's stock price to its lack of guidance [estimates of company performance], it's clear that Google does not cater to short-term investors.

Investors may be focusing on subprime mortgages, but there are market jitters about junk bonds, too. One option: Hedge your junk holdings by investing in the new Rydex Inverse High Yield Strategy Fund (RYILX) (RYILX). It's designed to go up as corporate credit quality goes down. You can make much the same play by short-selling the new Barclays iBoxx $ High Yield Corporate Bond (HYG) exchange-traded fund (HYG).

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