The Weekly Lineup: Twitter IPO and Markets Overheated Edition

Rising stock marketThe Twitter IPO

On its IPO debut last Thursday, Twitter (TWTR) fared much better than the Facebook IPO. The IPO (Initial Public Offering) price for Twitter was offered at $26 per share, with shares opening at $45.10 per share, and closing at $44.90 per share.  Shares traded as high as $50.09 during the initial debut.  As many have pointed out, the winners on this IPO day were those already holding shares.

Investors can’t seem to get enough of the Social Media IPO’s, with many willing to pay a 70% premium to purchase Twitter (TWTR) in the mid-forties price on opening day. However, even with a successful IPO, the fundamentals for Twitter are not pretty. In my previous post on Twitter I wrote the following:

“When you start to peel off the glitz there really isn’t a lot under the Twitter hood, other than its name and monthly users. Twitter is estimated to be a $1 billion dollar IPO, without profit or revenue, bleeding millions of dollars per month, and carrying over $418.6 million in debt…  Much like the Facebook IPO, Twitter also has an unknown revenue model with a lot of future uncertainty.”

If you are still considering buying Twitter, be sure to read my in-depth view of the Twitter IPO in Should You Buy Twitter?  

Are Markets Getting Overheated?

No doubt about it, most global markets are trading at all time highs. With markets appearing to be overheated by many investors, and valuations now getting on the high side, dividend investors are becoming concerned.  If you missed it, be sure to read staff writer Ben Carlson’s latest post, Are U.S. Dividend Stocks Overpriced?

On his own blog, Ben Carlson answers a reader question: Wait for a Crash, or Put My Money Back To Work?

The Dividend Guy also wrote a timely post on the Top 5 Things You Can Do When the Market Overheats.

It’s important to remember that trying to predict a market correction is about as likely as predicting the weather to the nearest hour during typhoon season. There is as much risk holding cash in a rising market, as there is holding stocks. Every decision has a trade-off.

Do you hold cash with virtually a 0% return, and wait for the black-swan event to rattle markets, and the eventual downturn? Or do you put your money to work through dividends, regardless of market conditions? Do you continue to buy quality paying dividend stocks at premium?  I believe my friend Dividend Mantra, has the right approach, purchasing stock positions every month regardless of market conditions. He is literally dollar cost averaging his shares over time.

An indexed approach is also a safe move here. A well diversified and balanced portfolio of both stocks and fixed-income (i.e. bonds) may not be as sexy in a rising market. However that diversification will sure protect you on the downside. Remember, what goes up must come down. Rather than worrying about whether stocks are over-valued or whether markets are ready for a downturn, investors need to remember to stick with their core plan.

The Weekly Lineup

Here are a few other great investing reads from around the web this week:

Back in October, Retire before Dad discusses his second dividend investment in KO. Be sure to check out this great post, Patience Pays – 16 Years of Buying and Holding Coca-Cola.

Dan Mac looks at the Golden Arches, in McDonald’s Dividend Stock Analysis.  Who doesn’t like McDonald’s?

Dividend Mantra looks at U.S. companies with Recent Dividend Increases.

The Dividend Monk reviews JNJ, in Johnson and Johnson, Let it Dip to a 3% Yield.

Dividend Ladder discusses some possible investment in Chinese companies – literally! In his post Go West for Dividends… Way West, DL looks at a couple of Asian tech companies trading on the Shanghai Stock Exchange.  Not for the faint of heart.

Have a nice long weekend everyone. 🙂

4 Responses to “The Weekly Lineup: Twitter IPO and Markets Overheated Edition”

  1. Retire Before Dad

    Nov 09. 2013


    Thank you for including my post in your recommendations list, among many good articles.


    • Dividend Ninja

      Nov 09. 2013

      This is long overdue my friend – as your blog is one of my favorites. Your CVX post was exceptional btw. 🙂


  2. Dividend Mantra

    Nov 10. 2013


    Thanks so much for the inclusion. Hope everything is well up there in Vancouver. 🙂

    I continue to stay consistent in times like these, because it’s served me well in the past. Are stocks expensive for the most part? Sure. But a dividend income snowball doesn’t get built by staying inside when there isn’t a ton of snow outside. You work with what you’ve got.

    Best wishes!

  3. Levi Blackman

    Nov 15. 2013

    I’m all for sticking to a plan. It is impossible to predict what the market is going to do. I have heard people claim the market is overheated and due for a crash. I have also heard that the Fed’s money printing is going to send stocks to the moon as inflation sets in. Cost averaging will protect you from all that and provide you much more predictable returns.