2013 Prognostications

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2012 Recap / 2013 Predictions

2012 Prognostication Recap.

  • Another year of mediocrity and the same old issues with the economy and dependence on oil for energy--with no great strides made in alternative sources. TRUE
  • The presedential election will have the lowest turnout ever due to mediocre Republican candidates who don't identify with the common man. Obama will be exhausted and will need to really learn how to work with the "system" or we will continue to move sideways. Miraculously, and because the Republican candidates are so bad, he will be re-elected. TRUE; though turn out was ok, Obama was re-elected, in part, because Republican candidate was so mediocre
  • While the Facebook IPO will be huge, there will be a "pulling back" of the currently un-tethered social sharing. Privacy will become more important and cherished. WRONG. Well, the Facebook IPO was a disaster. remarkably, it doesn't seem like social sharing is being pulled back; seems like personal validation is sought after more and more.
  • Ironically, people will turn to their communities for a greater sense of belonging while, at the same time, feeling further disenfranchised by the concept of the United States of America. This means the govt should return more power to the states. TRUE
  • Environmentalism continues to occupy more brainshare. Supermarkets charging for plastic bags is a small but wonderful step in increasing awareness. TRUE
  • Drew Brees and the New Orleans Saints will win the Superbowl. WRONG. Oops-New Orleans Saints get busted for "bounty" hits.
  • Contador will win the Tour de France. WRONG. Contador was busted for doping and did not participate

2013 Prognostications.
More optimistic than 2012.

  • Lance Armstrong. Compared to Barry Bonds, Lance did a lot more good than harm. But Barry will, one day, get voted in to the hall of fame. Lance is forever screwed; talk about a double standard. I maintain that Lance was the most impactful person across multiple dimensions in recent history and did more to help bike shops, cycling participation, and cancer awareness than anyone in the history of mankind. For this he deserves some praise.
  • Newton, CT school shooting. Those children won't die in vain. Kudos to Obama for trying to make a difference by the end of January. Things have gone too far and copycat killings are becoming way too commonplace. I heard a story on the radio that a company that makes armor-proof clothing has had huge increase in demand for bullet-proof backpacks! WTF? That simply can not be the new norm. It's bad enough that kids now use those rollyo thingys instead of a good old backpack!
  • Fiscal Cliff. Got to hand it to Obama for getting a kick in the ass. Now Boehner is being too stubborn and political, if not hypocritic. Why does our government insist on procrastinating instead of leading by example and getting things done?
  • Daily Deal Sites. The fad of "daily deal" and "group buy" sites is coming to a close. Buying something on a whim because it is unusual or a good deal has lost it's luster. 
  • Apple-becomes #1 business computer in next 5 years. That said, quality/innovation starts to wane b/c Steve is dead, mis-steps like maps, turnover in the senior ranks, and device saturation will slow Apple growth
  • Superbowl: Seattle Seahawks VS New England Patriots.
  • Tour de France: Ryder Hjesdal wins, Andreas Kloden #2.

2013 Stock Picks:

Recently, it feels like investors have resolved to invest in ETFs & mutual funds rather than picking individual stocks to mitigate risk -- with a few exceptions. The exceptional stocks seem to be Apple, Google, Exxon, and Amazon; they are giants. The second tier seem to be Netflix, Yahoo, Microsoft, and Facebook.

For 2013, I'd suggest that:

Don't buy:

  • Yahoo! has already grown a lot. Not sure how much headroom there is
  • Netflix-just wouldn't touch it. Too risky
  • Amazon. P/E ratio is way too high. Stock typically drops after Q4. Reconsider in Q2 or Q3 of 2013.

Buy:

  • Apple. Though it's taken a beating, Apple continues to be the most transformative company in the world w/respect to altering people's behavior. Sure, they have had some hiccups and there is churn in the senior ranks but they probably have some run left. Good dividend as well. Too bad people love to hate winners.
  • Google. They continue to execute at a high level with their products. As an example, "Google Hangouts" with videoconferencing is AMAZING. Better quality than Skype; how can this be when Skype has been at it longer? And of course, they dominate in paid & organic search and mobile.
  • Facebook. Finally coming out of their IPO bad dream. They have over 1 billion users and are constantly innovating on monetization. They can introduce revenue generating ideas that can have huge uptake due to their massive audience and they need to introduce better e-commerce solutions (which they will). Their ad targeting is impressive. Their main problem is trying to get users to engage with external websites instead of Facebook pages.
  • Linkedin. A fundamentally disruptive and "good" company. They make "social" more meaningful. Plus they have recurring revenue streams ("check who saw your profile") and are constantly innovating. They also have a rock-solid crew of the best ex-yahoo!s working there.
  • Adobe. While the stock is near highs for the past year, they have something of a monopoly on Photoshop, Acrobat, and Dreamweaver. Photoshop is ridiculously expensive (~$600) as is Dreamweaver (~$400). Yet there are no real alternatives for desktop publishing and web site creation software, respectively. Further, Adobe has instituted corporate licensing pricing options which make the costs seem lower while they are likely, in fact, higher, and will be recurring. Adobe is to Apple what Microsoft was to Intel/PC manufacturers. As Apple sales continue to grow, Adobe will have a tag-along effect.
  • Disney (DIS) and Time Warner (TWX). It's been reiterated that "content is king". Disney (owns ESPN, ABC, etc) and Time Warner (owns TNT, TBS, CNN, HBO, Cinemax, Warner Bros, New Line Cinema, People, SI, Time) are content kings. As content becomes more precious, these two stocks will become increasingly sought after. Note, would not recommend Time Warner Cable (TWC).
  • ATAX. This is a stock that invests in rental properties. Rental property income is 90% tax free. Plus they have a huge dividend of over 7%; this is an easy way to add "Real Estate" to your portfolio.
  • Microsoft. They are near their 1-year low, have 30% upside relative to their 1-year target, and their dividend is 3.4%--better than any savings account. Look for them to make big strides in 2013; perhaps they will try to buy Twitter and/or Yahoo!?
Symbol Price 12/28 Div/Share Div% 1-Yr Target % to Target EPS P/E
AAPL   $    512.02  $      10.60 2.1%  $    741.38 -45%  $ 44.15 11.59
ADBE   $      37.21  $            -      $      38.29 -3%  $   1.66 22.43
MSFT   $      26.75  $        0.92 3.4%  $      34.44 -29%  $   1.85 14.46
FB   $      25.80  $            -      $      31.04 -20%  $   0.19 133.63
LNKD   $    114.01  $            -      $    136.68 -20%  $   0.16 735.1
GOOG   $    705.04  $            -      $    798.94 -13%  $ 31.91 22.08
DIS   $      49.54  $        0.75 1.5%  $      54.75 -11%  $   3.13 15.82
TWX   $      47.38  $        1.04 2.2%  $      50.20 -6%  $   2.66 17.8
ATAX   $        6.72  $        0.50 7.4%  $        7.00 -4%  $   0.02 370
   $ 1,524.47      $ 1,892.72 -24%    
               
Indices Ticker 12/28/2012          
NYSE ^NYA 8316.17          
DJIA ^DJI 12938.11          
S&P 500 ^GSPC 1402.43          
Nasdaq ^IXIC 2960.31          

 

bull

2012 Stock Pick Recap

How did the 2012 picks do?
Not too bad; 18.4% return, beating the major indices.

2012                    
Picks Ticker 12/31/2011 12/28/2012 % gain   Indices Ticker 12/31/2011 12/28/2012 % gain
Amazon AMZN  $       173  $       247 42.7%   NYSE ^NYA  $     7,477  $     8,316 11.2%
Apple AAPL  $       405  $       512 26.4%   DJIA ^DJI  $   12,218  $   12,938 5.9%
Exxon XOM  $         85  $         85 0.4%   S&P 500 ^GSPC  $     1,258  $     1,402 11.5%
Google GOOG  $       646  $       705 9.2%   Nasdaq ^IXIC  $     2,605  $     2,960 13.6%
  Average  $    1,309  $    1,549 18.4%            

Here's the historical performance of the "prognostication picks".

2011                    
Picks Ticker 12/31/2010 12/31/2011 2011%   Indices Ticker 12/31/2010 12/31/2011 2011%
Bank of America BAC 13.34 5.56 -58%   NYSE ^NYA 7,964.02 7,477.03 -6%
Wells Fargo WFC 30.99 27.56 -11%   DJIA ^DJI 11,577.51 12,217.56 6%
Citibank C 47.26 26.31 -44%   S&P 500 ^GSPC 1,257.64 1,257.60 0%
BP BP 44.17 42.74 -3%   Nasdaq ^IXIC 2,652.87 2,605.15 -2%
Dell DELL 13.55 14.63 8%     Total 21,008.58 23,452.04 12%
Yahoo YHOO 16.63 16.13 -3%            
Sony SNE 35.71 18.04 -49%            
Total 201.65 150.97 -25%            
2010                    
Picks Ticker 12/31/2009 12/31/2010 2010%   Indices Ticker 12/31/2009 12/31/2010 2010%
Apollo Group  APOL 60.58 39.49 -35%   NYSE ^NYA 7,184.96 7,964.02 11%
DeVry Inc DV 56.73 47.98 -15%   DJIA ^DJI 10,428.05 11,577.51 11%
ITT Educat Svcs ESI 95.96 63.69 -34%   S&P 500 ^GSPC 1,126.42 1,257.64 12%
Comcast CMCSA 16.86 21.97 30%   Nasdaq ^IXIC 2,269.15 2,652.87 17%
Etrade ETFC 17.60 16.00 -9%     Total 21,008.58 23,452.04 11.6%
China Mobile CHL 46.43 49.62 7%            
Apple AAPL 211.64 322.56 52%            
Yahoo! YHOO 16.78 16.63 -1%            
ADM ADM 31.31 30.08 -4%            
Radio Shack RSH 19.50 18.49 -5%            
Irobot IRBT 17.60 24.88 41%            
Hanger HGR 13.83 21.19 53%            
Total 604.82  $    672.58 11.2%            
2009                    
Picks Ticker 1/2/2009 12/31/2009 2009%   Indices Ticker 1/2/2009 12/31/2009 2009%
Campbell Soup CPB 30.43 33.8 11.1%   NYSE ^NYA 5,915.73 7,184.96 21.46%
Walmart WMT 57.18 53.45 -6.5%   DJIA ^DJI 9,034.69 10,428.05 15.42%
Phillip Morris PM 44.12 48.19 9.2%   S&P 500 ^GSPC 931.80 1,126.42 20.89%
Altria Group MO 15.2 19.63 29.1%   Nasdaq ^IXIC 1,632.21 2,269.15 39.02%
Procter & Gamble PG 62.8 60.63 -3.5%     Total 17,514.43 21,008.58 19.95%
Gap, Inc GPS 14.07 20.95 48.9%            
Tootsie Roll TR 25.77 27.38 6.2%            
Winnebago WGO 6.32 12.2 93.0%            
Yahoo YHOO 12.85 16.78 30.6%            
Google GOOG 321.32 619.98 92.9%            
S&P index SPY 92.96 111.44 19.9%            
Chipolte Mex Grill CMG 64.14 88.16 37.4%            
McDonalds MCD 63.75 62.44 -2.1%            
Nintendo NTDOY.PK 48 29.82 -37.9%            
Hasbro HAS 29.6 32.06 8.3%            
Total 888.51 1236.91 39.21%            
    Avg return 24.42%            
2008                    
Picks Ticker 1/2/2008 12/31/2008 2008%   Indices Ticker 1/2/2008 12/31/2008 2008%
AT & T T 41  $       28.50 -30.5%   NYSE ^NYA 7,753.95 5,757.05 -25.75%
Comcast CMCSA 17.7  $       16.88 -4.6%   DJIA ^DJI 10,717.50 8,776.39 -18.11%
Tootsie Roll TR 26.33  $       25.61 -2.7%   S&P 500 ^GSPC 1,248.29 903.25 -27.64%
Plantronics PLT 25.4  $       13.20 -48.0%   Nasdaq ^IXIC 2,205.32 1,577.03 -28.49%
Tata Motors TTM 19.45  $         4.45 -77.1%     Total 21,925.06 17,013.72 -22.40%
Electronic Arts ERTS 56.76  $       16.04 -71.7%            
Rainmaker RMKR 6.12  $         0.85 -86.1%            
Philips PHG 42.34  $       19.87 -53.1%            
Johnson Controls JCI 34.59  $       18.16 -47.5%            
Etrade ETFC 3.43  $         1.15 -66.5%            
Chinindia ETF FNI 27.37  $       11.60 -57.6%            
Makita MKTAY 41.95  $       22.18 -47.1%            
Total 342.44  $      178.49 -47.9%            
    Avg return -43.7%            
2007                    
Picks Ticker 12/29/2006 12/31/2007 2007%   Indices   12/29/2006 12/31/2007 2006%
Microsoft MSFT  $       29.86   $       35.60  19.2%   NYSE ^NYA  $  9,139.02   $  9,740.32  6.58%
Nintendo NTDOY.PK  $       32.50   $       74.05  127.8%   DJIA ^DJI  $12,463.15   $13,264.82  6.43%
Toyota TM  $     134.31   $     106.17  -21.0%   S&P 500 ^GSPC  $  1,418.30   $  1,468.36  3.53%
Google GOOG  $     460.48   $     691.48  50.2%   Nasdaq ^IXIC  $  2,415.29   $  2,652.28  9.81%
Yahoo YHOO  $       25.54   $       23.26  -8.9%     Total 25,435.76 27,125.78 6.64%
Cummins CMI  $       59.09   $     127.37  115.6%            
Caterpillar CAT  $       61.33   $       72.56  18.3%            
Dell DELL  $       25.06   $       24.51  -2.2%            
China ETF FXI  $     111.45   $     170.45  52.9%            
Korea ETF EWY  $       49.40   $       64.70  31.0%            
Brazil ETF EWZ  $       46.85   $       80.70  72.3%            
India ETF INP  $       52.45   $       97.79  86.4%            
Total  $  1,088.32   $  1,568.64  44.1%            
    Avg return 45.1%            
2006                    
Picks Ticker 12/30/2005 12/29/2006 2006%   Indices   12/30/2005 12/29/2006 2006%
Cisco  CSCO   $       17.12  27.33 60%   NYSE ^NYA 7,753.95 9,139.02 17.90%
Honda HMC  $       28.97  39.54 36%   DJIA ^DJI 10,717.50 12,463.15 16.30%
Infosys  INFY   $       40.43  54.56 35%   S&P 500 ^GSPC 1,248.29 1,418.30 13.60%
Toyota  TM   $     104.62  134.31 28%   Nasdaq ^IXIC 2,205.32 2,415.29 9.50%
Apple  AAPL   $       71.89  84.84 18%     Total 21,925.06 25,435.76 16.01%
Google GOOG  $     414.86  460.48 11%            
Walmart WMT  $       46.80  46.18 -1%            
Ford F  $         7.72  7.51 -3%            
Motorola  MOT   $       22.56  20.56 -9%            
Yahoo YHOO  $       39.18  25.54 -35%            
Total  $     794.15   $     900.85  13.4%            
    Avg return 22.6%            
2005                    
Picks   12/31/2004 12/30/2005 Return   Indices Ticker 12/31/2003 12/31/2004 Change
AAPL AAPL  $       32.20   $       71.89  123.3%   NYSE ^NYA 7,250.06 7,753.95 6.95%
Google GOOG  $     192.79   $     414.86  115.2%   Dow Jones ^DJI 10,783.01 10,717.50 -0.61%
Texas Instruments  TXN  $       24.62   $       32.07  30.3%   S&P500 ^GSPC 1,211.92 1,248.29 3.00%
Amazon AMZN  $       44.29   $       47.15  6.5%   NASDAQ ^IXIC 2,175.44 2,205.32 1.37%
Ask Jeeves ASKJ  $       26.75   $       28.31  5.8%     Total 21,420.43 21,925.06 2.36%
Yahoo YHOO  $       37.68   $       39.18  4.0%            
PalmOne PLMO  $       31.55   $       31.80  0.8%            
Starbucks SBUX  $       31.18   $       30.01  -3.8%            
Sprint FON  $       24.85   $       22.82  -8.2%            
Walmart WMT  $       52.82   $       46.80  -11.4%            
Sears S  $       51.03   $       43.86  -14.1%            
Research in Motion RIMM  $       82.42   $       66.01  -19.9%            
Ebay EBAY  $       58.17   $       43.22  -25.7%            
Kodak EK  $       32.25   $       23.40  -27.4%            
Ford FORD  $       14.64   $         7.72  -47.3%            
Total  $     737.24   $     949.10  155.6%            
    Avg return 8.5%            
2004                    
Picks Ticker 12/31/2003 12/31/2004 Change   Indices Ticker 12/31/2003 12/31/2004 Change
Toyota TM 68.75 81.87 19.1%   NYSE ^NYA 6,464.00 7,250.06 12.16%
Wipro WIT 15.4 24.65 60.1%   Dow Jones ^DJI 10,453.92 10,783.01 3.15%
Intel INTC 31.85 23.39 -26.6%   S&P500 ^GSPC 1,111.92 1,211.92 8.99%
Microsoft MSFT 24.48 26.72 9.2%   NASDAQ ^IXIC 2,003.37 2,175.44 8.59%
Inuit INTU 52.86 44.01 -16.7%     Total 20,033.21 21,420.43 6.92%
Adobe ADBE 39.08 62.74 60.5%            
Sina.com SINA 33.75 32.06 -5.0%            
Yahoo YHOO 22.51 37.68 67.4%            
Total 288.68 333.12 15.4%            
    Avg return 6.4%