The Ninja’s Year in Review: 2012

I’ve decided to start a new tradition here on the Dividend Ninja, and do an annual year in review. Here are some of the notable business stories from 2012, and my takeaways. Happy New Year everyone! I wish you all the best in 2013. :)


The End of the World

End of World Confirmed

courtesy of weeklyworldnews.com

The end of the world wasn’t business news. However, it should be obvious to any investor the end of the world would have a big impact on their portfolio (since it wouldn’t exist). According to the Mayan Long-Count Calendar, which ends on a 5,125 year cycle, the world was set to end on December 21st, 2012. Of course the world didn’t end, people went Christmas shopping, and companies continued to issue dividends.

Although the Mayans predicted this date with incredible accuracy, they didn’t really claim there would be big cataclysmic events during the End Time. Much of that hype has been modern spin. Fortunately, the world did not end, and my portfolio remained intact. How did your portfolio fare during the end of the world?

The takeaway: Past performance is not an indicator of future results.


The Fiscal Cliff

Wall street and the Fiscal Cliff

courtesy www.financialpost.ca

While the world didn’t end, it might as well be ending. The business news is having a feast with the Fiscal Cliff. Only two months earlier hardly anyone had heard of the Fiscal Cliff, but that didn’t stop the media. Predictions of dire global economic recessions, the U.S. economy sliding into oblivion, and investors losing all of their hard earned equity were in full spin. Fiscal Cliff fallout has been spun by the media in every direction, and it’s even bigger news than the end of the world.

The Dividend Ninja, ever greedy for more SEO traffic and ad revenue, posted Canadian Investors and Fiscal Cliff. However, like the end of the world, the Fiscal Cliff may be more hype than substance. The impending result of the Fiscal Cliff, even after a brief sell-off, may already be factored into the market. Worst case scenario, you get to buy more companies on sale! I can assure you, McDonald’s and Coca-Cola will continue to pay their dividends in the post fiscal-cliff apocalypse. However, if the end of the world and the fiscal cliff wasn’t enough to get you back on track, then ask yourself, do you have a plan?

The takeaway: Tune out the noise (the news) and stick with the plan!


Apple Soars to $1000 per Share

A Bite Into AppleAhem! Well actually, shares of AAPL didn’t hit $1000 per share, but many media pundits and investors felt it would back in April. I covered the hype over Apple (AAPL) stock in, Should You Take a Bite into Apple? At that time, shares of Apple were trading at $607 per share. Many investors felt Apple was undervalued, fairly priced in terms of its PE Ratio, and that $1000 per share was in reach (see comments in that post). Apple (AAPL) shares marched on to hit a high of $702 on September 18th. Today Apple is trading at $509 per share, a -27% decline off its highs, with further downward pressure. When euphoria hits the market, everyone owns the stock, and it’s going to the moon, you know the best days are over.

The takeaway: Don’t get caught up in the hype!


RIM Rally, The Big Surprise

The biggest surprise of the year had to be the sudden turnaround in RIM stock. While Apple stock was soaring to $700 per share, Research in Motion (RIM) shares were tanking into the toilet. Numerous production delays, a tablet (PlayBook) that was dead on arrival, marketing flops, and widespread criticisms of new management pummelled the stock. Who on earth would want to buy RIM? Even value investors were writing off RIM, when it hit its low of $6.18 on September 23rd.  All that changed with the hype surrounding the BlackBerry 10 release.  Although unproven and unknown, it was enough to send RIM shares soaring.

RIM CEO Thorston Heins with BlackBerry 10There were numerous analyst upgrades on RIM throughout October and November. RIM shares rose sharply, to close at a high of $13.95 on December 19th, 2012. Many investors started to buy in past the $12 mark, believing they were buying a quality company at a bargain price. The bubble burst on December 23rd, shortly after the end of the world, when the same analyst then downgraded his recommendation. That sent RIM shares down to $10.50 per share, with RIM shares currently trading at $11.75 per share.

So is RIM a good investment?  With too much uncertainty surrounding OS 10 and the new BlackBerry devices yet to be released, it’s probably too early to tell. Currently RIM does not pay a dividend, and is far behind Apple and Android in market share.

The takeaway: Don’t speculate and buy into uncertainty.


The Facebook IPO

Facebook IPOOn Friday May 18th, 2012, the largest IPO (Initial Public Offering) in history was launched for Facebook (FB). Estimated at over $104 billion dollars, this was the much anticipated IPO of a prize race horse about to belt off the starting line. I felt that I was watching a part of history. BNN (Business News Network) proudly had a real-time quote taking up the whole screen ready to go. It was a big-time event!

There was a lengthy half-hour delay, but shares soared to a daily high of $45 then closed near the IPO price of $38.20. During the day it’s alleged that underwriters sold their shares to keep the price afloat above the IPO price. The IPO was botched from the minute it started, and many felt the original IPO price was grossly overvalued. In the days that followed, numerous legal suits were launched against Facebook and its underwriters for misrepresentation and over-valuation.

Today, Facebook shares are currently trading at $25.91 per share, a decline of -31.8% from the $38 IPO price. But for those investors who bought during the IPO, the decline is probably much more. Just goes to show, only in America can you wear a hoodie and still make millions!

I wrote an extensive three part series on the Facebook IPO in Why You Shouldn’t Buy Facebook.  Be sure to check it out and read Part-2 and Part-3 as well!

The takeaway: Be wary of a sheep in wolf’s clothing (i.e. IPO’s or CEO’s wearing hoodies).


Readers, what’s your take? What do you think were the biggest investing stories of 2012?

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12 Responses to “The Ninja’s Year in Review: 2012”

  1. Brett Wilson

    Dec 31. 2012

    I like your list. I still think that AAPL could go to 1,000 dollars in 2013. It’s dramatic drop can simply be attributed to the fiscal cliff. Many investors wanted to pay lower taxes on their dramatic capital gains.

  2. andy

    Dec 31. 2012

    I did some tax loss selling on the 24th, take the loss and move some dead money into better dividend paying stocks.
    Happy new year

  3. Dividend Mantra

    Dec 31. 2012

    Ninja,

    Great stuff. Just a few reasons here to focus on the long-term and ignore the noise. Keep the headphones on, invest in high quality, pay attention to value and reinvest the dividends!

    I hope 2013 gets off to a fantastic start for you.

    Best wishes.

    • The Dividend Ninja

      Jan 02. 2013

      Mantra, always appreciate your support! 2013 is looking great, and I already know you are off to a good start as well.

      Cheers

  4. Marvin

    Jan 01. 2013

    Looks like you had a great year. I agree with you on the RIMM analysis, not worth risking your hard earned money on something so speculative.

    The fiscal cliff turned out to be a dud. I should have known better with all the media coverage behind it but you live and you learn.

    • The Dividend Ninja

      Jan 02. 2013

      Hey Marvin, since it was media driven from the beginning, it really sounded more like spin than substance to me. Having said that as MOA points out below, the U.S. is indeed in a in a financial mess. Does it really affect your KO and MCD dividends? Probably not. ;)

      However it would have been nice if the stock market took a breather and allowed us to get some great companies on sale! I think we were all hoping for that.

      All the best,
      Cheers

  5. My Own Advisor

    Jan 01. 2013

    I think it was a great year for Ninja and investing stories in general.

    Regarding Facebook, I don’t put very much faith in any IPO, so not surprised to see it fall from grace.

    As for RIM, it could climb higher in 2013. I would never own it though.

    Fiscal cliff or not, the U.S. is in some serious trouble financially. At least the blue-chips will continue to pay dividends, like KO, JNJ, PG, MCD, ABT, GE and T as they try and recover for the next decade.

    Happy investing in 2013!

    Mark

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