It was the best month for the markets since 1987. Yahoo!
In 2009 and 2010 I wrote a lot about the ‘Inconceivable Rally‘ and I was investing in web startups in a relentless fashion. The year 2011 was a great one for startup valuations and 2012 is now what I call the ‘The Relentless Rally’ – at least to the shortsellers. We are in one of those amazing periods where we are gripped by momentum. Slap any four letters together and buy them and you made money, just ask Kenny.
I got a few things wrong in January…Google was a ‘fakeout’ breakout and Facebook chose $FB as their ticker symbol, not $FBOOK. Other than that, here are the tickers that were all the rage in January:
1. $AAPL – Apple is its own asset class. There has never been a company that has defeated “the law of big numbers” for so long. It is the most followed stock on StockTwits.
2. $FB – $100 billion valuation might seem a lot, but the truth is that the social network is more popular than the stock market itself. It is not even publicly traded yet, but it is the talk of the town and if often was a top trending ticker on StockTwits in January.
3. $AMZN – Amazing sales growth, tepid net income and margins, but Amazon has never tried to conform to Wall Street’s games of short-term expectations. This company just owns the internet – from infrastructure to the cash register. Its earnings disappointed two quarters in a row, but maybe this was the best thing that could have happened to its real long-term investors. Expectations have been lowered and it would be much easier to be blown off in the future.
4. $BAC – Warren Buffett took a lot of ridicule when the common shares of his investment briefly dipped below $5, but look who is laughing now. You can’t fight creative accounting and good mood. $BAC has become one of the best performing large cap YTD. Note to myself – take baths more often. Genius ideas could come from that place.
5. $GOOG – continues to be a one-trick pony that relies on advertising income only and there are a lot of players reaching for its pie. The silver lining is that the pie is growing and there might be enough for everyone, but not everyone will survive of course. $GOOG tricked out many investors last December by breaking out to new 3 year high, only to report dissapointing earnings in January and plunge.
6. $NFLX – came back from the dead, rallying almost 100% in January, squeezing everyone who was unwise to average up their short positions. Guess what. Valuation does not move prices in short-term perspective. Supply and demand do and they are impacted by money flow and confidence.
7. $GMCR – one of the high-roller short targets in the second part of last year, came back with vengeance in January. $GMCR sells addiction and this is a good business to be in. Their products are everywhere, even in Starbucks. I don’t drink coffee, but half of the world does so, on a regular basis. Huge market, but how much of the demand has been already discounted in the price of the stock?
8.$RIMM – It used to be The Canadian Tech Proud, now it the Canadian Nokia. There is a reason behind the saying that “you could rarely find value tech stocks”. Changes in technology are so fast that the average life cycle of a product has decreased exponentially. Between rumors of being acquired, changing its CEO and possibly switching to another OS, $RIMM was a frequent trending ticker on StockTwits in January
9.$IBB – broke out to new all-time high, giving a boost to multiple known and unknown biotech companies. We are all getting old and need out medicine and I have the feeling that biotech will be the next big industry to pull the American economy in the next 10-20 years. Smart money knows that, but it is hard to choose from the hundreds of stocks in the field. Which will be the winners? $IBB is a good proxy, if you don’t want to guess and want some action in the overall trend.
10. $BVSN – rallied 300% in a month on no news, bringing back memories from the dot.com boom, when strippers and taxi drivers became day traders and smart, seasoned value investors lost their shirts.