It's difficult to deny Google's transformative -- and disruptive -- power on many traditional businesses from newspapers to book publishing. Now a decade after its founding by two Stanford University students, Larry Page and Sergey Brin, the digital media behemoth is experiencing growing pains -- while reaching for even more.

"And they're not always well-equipped for those challenges," says our guest Ken Auletta, author of the new book "Googled: The End of the World as We Know It." Based on more than a dozen visits to the tech campus, Auletta had access to the founders, CEO Eric Schmidt and about 150 present and former employees for the book.

Challenges ahead.

Many media-industry pundits have dismissed Comcast's play for NBC as the latest foray of a deranged distribution guy (Comcast CEO Brian Roberts) obsessed with getting into the content business.

The evidence?  Roberts tried desperately to buy Disney a few years ago--over his shareholders' screams--and now he's furiously negotiating for a hobbled NBC.  All this while fellow cable-content mogul Jeff Bewkes of Time Warner is bemoaning the hard lessons his company learned when it tried to combine content and distribution into the Holy Grail of "synergy."

But Roberts isn't a madman, says Leo Hindery, managing director of private-equity firm InterMedia Partners.

Comcast's goal here...

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Every time Warren Buffett does something, a legion of Buffett-watchers immediately pass judgement on whether the world's most-admired investor has finally lost his mind.

Well, he hasn't, says one of the smartest of those Buffett-watchers, hedge-fund manager Jeff Matthews, the author of "Pilgrimage to Warren Buffett's Omaha."

Buffett's $44 billion bet on a railroad--the biggest bet of his career--is a long-term play on economic recovery and, possibly, global warming.  And it includes a nice potential option in the form of 32,000 miles of rights-of-way that could eventually form the backbone of a nationwide broadband network.

Buffett's Burlington bet probably won't earn the same eye-popping returns of some of his earlier investments, says Matthews, founder of Ram Partners and author of the popular blog, Jeff Matthews Is Not Making This Up.  He paid (relatively) a lot for it, and railroads aren't a major growth business.

But considering Buffett's desire to put a massive amount of money to work and earn a decent return, this seems like a typically smart play.

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From The Business Insider, Nov. 3, 2009:

Warren Buffett's Berkshire Hathaway (BRK) is making a big rail buy, acquiring Burlington Northern (BNI) for $100 per share or about $44 billion. The deal is the largest in Berkshire's history.

Shares of Burlington Northern had been trading around $76, so shareholders are getting a fat 30% premium.

Berkshire already owned over 20% of the company.

From the release:

“Our country’s future prosperity depends on its having an efficient and well-maintained rail system,” said Warren E. Buffett, Berkshire Hathaway chairman and chief executive officer. “Conversely, America must grow and prosper for railroads to do well. Berkshire’s $34 billion investment in BNSF is a huge bet on that company, CEO Matt Rose and his team, and the railroad industry.

“Most important of all, however, it’s an all-in wager on the economic future of the United States,” said Mr. Buffett. “I love these bets.”

Click here to view the full news release.

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Remember all the reform talk from a year ago? With the massive post-March rally still intact and big profits and bonuses back en vogue on Wall Street, it's easy to lose track of the excessive risk-taking that triggered a near depression and financial system meltdown. 

"Compensation right now is completely screwed up. It is not tied to long-term performance," says our guest William Black, white-collar criminologist and associate professor of economics and law at the University of Missouri-Kansas City. Black recently testified before Congress on executive pay.

Sure special "pay czar" Kenneth Feinberg last week announced seven taxpayer-rescued firms are subject to statutory rules on executive compensation. But the restrictions are temporary and far short of longer-term "prudent" solutions needed, says Black, a former federal bank regulator and a top investigator for the definitive Congressional report on the S&L crisis.

Primarily, Black calls for the:

1. Need to adopt compensation reform at all companies -- not just the gang of seven under Feinberg's purview (AIG, BofA, Chrysler Group, Chrysler Financial, Citigroup, and General Motors, General Motors Acceptance.)
...

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It still feels like a recession and job losses are mounting. So what's in store for the American consumer and all-important holiday shopping season?

Personal debt levels are exaggerated and lack context, says our upbeat guest Jim Paulsen, chief investment strategist at Wells Capital Management. Specifically, Paulsen argues rising household costs are as much a reflection of rising energy prices as higher debt levels and spending binges. (Click here for charts that break out the U.S. household financial obligations ratio, as published by the Federal Reserve.)

Of course there are risks to his rosy scenario. With oil hovering around $80/barrel and fuel prices like gasoline rising, consumers face a potentially double whammy of (1) higher energy prices and (2) higher cost of money as interest rates eventually tick higher.

But Paulsen, ever the bull, argues higher energy consumption will be accompanied by an overall improved economy that would also bring growth in jobs and income.

Holiday shopping forecast:...

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From The Business Insider, Oct. 28, 2009:

Google is about to make life trickier for GPS mapping companies, and could make its Android platform more attractive: It's releasing a new, free turn-by-turn GPS mapping service, which will launch next week on Motorola's Droid phone.

It will follow on more Android 2.0 phones, and could eventually follow on Apple's iPhone. According to Gizmodo, "Google implied they are working closely with Apple now on it."

This is potentially bad news for GPS companies such as TomTom and Navigon and telcos like AT&T, which charge up to around $100 per year for this sort of service.

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Value investor, hedge-fund manager and author Joel Greenblatt wrote "The Little Book That Beats the Market" earlier this decade. It was a hit and garnered a loyal following, even among novice investors.

Greenblatt now has opened Formula Investing, managing investors money using his famous "magic formula," made popular by the "Little Book."

So why open Formula Investing, when the book's conceit is DIY investing? As Greenblatt tells Aaron, "A lot of people, after I wrote the book said to me, 'Can you just do this for me?' " They cited complexity or just lack of time.

The "magic formula" is based on two key metrics:

• #1 Cheap: Greenblatt looks for firms that are cheap based on the prior year's earnings, which removes the guesswork.
• #2 Good: Greenblatt seeks companies with high return on capital, a key measure of quality.

The key, Greenblatt says, is combining the two metrics and buying a basket of 20 to 30 equities, not using the formula to make individual stock picks.

What are the returns using the "magic formula," you ask?...

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From All Things Digital, Oct, 26, 2009:

Verizon posted a decent third quarter this morning, besting consensus estimates. Analysts polled by Thomson Reuters had been expecting earnings of 59 cents on revenue of $27.17 billion. Excluding one-time costs, Verizon reported profits of 60 cents a share on revenue of $27.3 billion. That’s a 10 percent decline year-over-year, but still better than expected.

Wireless-subscribership gains, though they trailed AT&T’s iPhone-bolstered numbers, were impressive nonetheless. Verizon added 1.2 million wireless customers during the quarter raising its total count to 89 million. That’s not the 2 million AT&T added, but it certainly demonstrates that the absence of the iPhone from Verizon’s handset line-up isn’t holding the carrier up all that much.

Verizon also added 198,000 net new customers for FiOS Internet and 191,000 for FiOS TV service.

“Verizon continues to generate strong cash flow, which we have used in building the foundation for sustainable, long-term shareowner value,” Verizon CEO Ivan Seidenberg said in a statement. “Even through the worst of the recession, we have continued to raise our dividend and to add new customers, expand markets and grow revenues based on the power and innovation of Verizon’s wireless, broadband and global networks.”

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From The Business Insider, Oct, 23, 2009:

Nouriel Roubini believes that a "wall of liquidity" is chasing all kinds of assets, yet once the economy disappoints expectations, it will all come crashing down.

Yet for Dr. Doom, gold isn't the answer.

According to him, despite the temporarily asset bubbles right now, we're still in a deflationary world and we'll realize it soon enough once growth stagnates and all kinds of inflated asset categories come falling down.

IndexUniverse: Roubini: I don’t believe in gold. Gold can go up for only two reasons. [One is] inflation, and we are in a world where there are massive amounts of deflation because of a glut of capacity, and demand is weak, and there’s slack in the labor markets with unemployment peeking above 10 percent in all the advanced economies. So there’s no inflation, and there’s not going to be for the time being.

The only other case in which gold can go higher with deflation is if you have Armageddon, if you have another depression. But we’ve avoided that tail risk as well. So all the gold bugs who say gold is going to go to $1,500, $2,000, they’re just speaking nonsense. Without inflation, or without a depression, there’s nowhere for gold to go. Yeah, it can go above $1,000, but it can’t move up 20-30 percent unless we end up in a world of inflation or another depression. I don’t see either of those being likely for the time being. Maybe three or four years from now, yes. But not anytime soon.

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