Week 52 of 2012
Where has the year gone? As 2012 ends and we enter 2013, many will be scratching their heads over what exactly happened in 2012 to drive the FTSE up to touching distance of 6000. It seemed like doom and gloom as ECB and Fed Reserve played wait-and-see with the recovery. By the time Obama was at the polls QE3 was in full swing across the globe. Equities should have been body popping with excitement – but instead were left largely neglected amongst the small cap and mid caps.
The traditional low risk stocks that often frequent the FTSE100 or 250 were in popular demand with many seemingly shrugging off dire earnings announcements and continuing to be bought up.
But the last quarter was probably the most revealing. While most expected Equities across the US and Euro markets too surge higher – most simply plateaued or traded sideways. Institutions awash with QE3 cash were happy to avoid US and Euro markets and head further east to Japan. The latter was the chief beneficiary as the Nikkei surged from 8360 in Jan to finish 2012 at 10395. Under normal circumstances a 2000pts plus gain in one year would be astonishing – but when you account for the fact that 1800pts came in the last 10 weeks of the year – it becomes even more remarkable. But that’s QE3 for you. It’s terrific for equities. Trouble is – this year it wasn’t making its way through to the normal channels (UK/US and Europe). Perhaps a reversal of this trend could see markets boosted in 2013 and Japan and co topping off/pulling back? For the time being – until the US sorts its debt ceiling issues (kicked down the road to Feb 2013) the hot money might be quite happy staying where it is.
The Dow closed the year at 13104, 7.3% higher than last year. The FTSE 100 closed the year at 5898 and a respectable 5.8% gain on the year. But both were dwarfed by the massive 25%+ rise on the Nikkei.
A virtual portfolio has been set up using the 2011 final trading day close figures as a starting point and £1000 has been invested in each stock. This does not include buying fees or stamp duty and is purely intended to be used as a benchmark or summary for each week. 2 newspaper top tens for 2012 have been included to help monitor/compare against.
Week 52 stock picks summary:
Hats off to the Independents stock picks for 2012. A near 50% gain is nothing short of remarkable especially when you account for the simple fact that these stock picks are ‘static’ – they are not traded at highs and bought lower during the year on the dips like most active hedge funds. They are literally stock picks that are tucked away in the draw for 12 months. In today’s markets it’s not entirely sensible to treat your stock picks like premium bonds. The markets are going through one of their most volatile periods in history. Keeping a keen eye on your stocks is very much about personal risk assessment and your own strategies. But there are many that will not admit to leaving their stocks unattended for 12 months of the year. The higher risk stock picks certainly need more baby sitting than the conservative lower risk picks. The hotlist is packed of potential multi-baggers/high risk plays yet is more likely to deliver losers than winners as many are exploring high impact oil/gas opportunities based on less than 25% Chance of Success (CoS). The volatility of these stocks makes a 12 month journey a little tricky to summarise. For instance – the year ending figures for Gulf Keystone (an AIM fav for pi’s) shows a poor performance for 2012 of -6.84%. Yet in early 2012, the stock was soaring high at 460p+ and a gain of near 150%! A multi-bagger for 2012 but only if you sold at the top. Hence – rating a 12 month performance based on the final closing prices on Dec 31st does not quite tell the true story. But that’s the rules of the game for these stock picks and investors are free to sell, buy or hold as they see fit based on their own risk management or via guidance from a regulated FSA advisor.
That all said and done – it does indeed demonstrate just how good the Independent’s 48%+ gain is for 2012.
At the heart of their stock picks performance was a commodity player called Providence Resources. It’s ironic that the best performer should come from a sector that has largely under performed in 2012. But that’s the beauty of high impact exploration. One big discovery really is transformational for the smaller players.
This year saw the introduction of the more conservative B-list picks from thesharehub. Designed to compete more on a level par with the typical newspaper picks by mixing it up with a variety of sector picks based on lower risk stocks. Pipping the TempusTimes to second spot is enjoyable but when compared to the likes of the Guardian and Telegraph picks, it still lags them by a large gap. So a good performance but nothing to write home about.
The Hotlist comes in with another red numbered finish which is disappointing. After spending most of the year in the blue, the stock picks lost momentum with inconclusive / poor drill results from Antrim, MXP and BOR. Ophir spared further blushes but along with GKP did provide multibagger returns albeit for a temporary period.
Mergers were a further achillies’ heal. Petroceltic and San Leon were both hamstrung by merger /acquisition deals. Whilst attractive longer term – both deals are very much stories for 2013 rather than 2012, hence both stocks performances were well below their expected ability.
Overall, all the Hotlist picks could easily roll over into 2013 as all stocks with exception to BOR have the same potential to deliver great returns in the new trading year as they did in 2012. In fact, quite a few are in a much better shape now than they were 12 months ago. Yet mysteriously trade at lower prices. Perhaps Mr Market will take a refresher in 2013 and give the smallcaps and mid caps a chance to shine. 2011 was ugly, 2012 was not that pretty either – perhaps 2013 is the year for a return to higher risk stocks. They are certainly cheap enough based on the last 2 years under performance. The government’s move to allow all AIM listed stocks into ISA’s should add some interest back into the neglected sector.
The new stock picks for 2013 will be announced (before market open tomorrow).
Final standings / Week 52 Results
1. The Independent 2012 +48.44% (weekly gain of 2.45%)
2. Thesharehub’s ‘B’ List 2012 +10.25% (weekly gain of 0.1%)
3. Tempus Times 2012 +8.56% (weekly gain of 0.57%)
4. Thesharehub’s 2012 Hotlist -8.63% (weekly gain of 2.32%)
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