Anyone interested in having our own Barron's Roundtable about investing in 2013? I'll start with my thoughts, and will love to hear yours:Berkshire. Well I have officially joined the cult and now BRK-B’s make up 50% of my investable assets. I really feel like the downside is limited at these levels, and if the last time Mr. Buffett initiated a buyback is any indication, than forward returns from these levels should be quite satisfactory (according to Tilson, BRK soared 83% in the year following the last buyback). While I highly doubt this type of return will occur, a 25% adjustment upwards could happen very quickly if Mr. Market changes its bearish tone towards the insurance industry. And I do believe that has been the major headwind to BRK that many people aren’t talking about, in addition to the Gates Foundation constant selling pressure. But regardless, BRK does look attractive here and I also like the added in hedge against bad things happening the economy. If the market does tank again, we can feel confident that Warren will deploy some of that $40 billion to shareholders advantage. It’s a nice roundabout put option. Speaking of insurance, on a price/book basis insurance stocks are at multi-decade lows, driven partly because of a fear of catastrophic weather evens being the new normal, and partly due to interest rates being so damn low. If you take Metlife as an example, the stock currently trades at half its book value, yet since 2001 it has typically traded between 1 and 1.3x book. If BRK is on sale, Metlife is on a fire sale. I’m very bullish on a MET, AFL, and AIG “buy and look 5 years from now” trade. What will 2013 bring for Apple? A chartist would tell you that things aren’t looking good for Apple, but who really knows for sure. My big problem with Apple has always been replicating the big pile of earnings. I am much more confident about the willingness of a consumer to spend $2,000 a year at Costco then at Apple. Are most people going to drop $400 on a smart phone year after year after year? Probably not. And that brings me to another problem that is inherent in nearly all technology companies, namely how Wall Street is enamored by what may happen rather than what actually does happen with stocks. Look at any nearly tech stock over the last 20 years, and you’ll see that price flies high at future growth potential, and then the xyz company actually reaches that potential and no one is interested anymore and valuations get cheap relative to earnings (see MSFT, INTC, CSCO). That is why Apple really needs to go out and do to the TV what they did to the mp3 player and cellular phone.If Apple designs a TV that is touch screen, looks like an aesthetically pleasing mirror hanging on the wall until you turn it on, and caters to an on demand customer they will revolutionize the industry and will pose a major threat to cable companies. (Almost like an iTunes impact). The hype that this type of product will generate will send Apple shares soaring. Anything short of this and I think Apple investors are going to be disappointed going forward.In terms of the stock market in general as it pertains to global macro events, I’m still bullish. The market is reacting differently to the fiscal cliff than it would have in 2009, 2010, or 2011. People are still skiddish about the economy and therefore the wall of worry is still being climbed, but the panic selling simply is not occurring like it would have a couple years ago had this type of event been taking place. I take that as a sign that we are going higher in 2013 and could possibly see all-time highs sometime in the coming year. Once animal spirits return in full-fledge, then I will start to get nervous. Let’s come back a year from now and see if I’m right.Highest conviction picks for 2013 in no order: BRK, AIG, CELG, MET, AFLStay away from: Japanese YenWishing everyone a very happy, healthy, and prosperous 2013!
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