| Predictions Gone Wild – 2012
Humans predict 2 things: what we most want to happen - and what we least want to happen. Like I've said a thousand times before, NEVER make an investing decision based on a forecast or prediction.
Here are some "sure thing" predictions from 2012 to illustrate why:
1) Facebook shares will skyrocket
After all, as a household name with over a billion active users, why wouldn't it? Initially shares did accelerate. Then investors realized Facebook hasn't figured out a way to make money and the stock price plummeted.
Based on earnings, investors are still paying 10 times more per share than the average S&P 500 company. My only question about the stock is: Is "speculative" a strong enough word?
2) China's economy will crash
After China's GDP dropped to an abysmal 7.7% from previous double digit growth, many pundits forecasted a "hard landing" (major recession) last year. Not long after leadership focused on measures to better ensure stable growth going forward, and China's economy started north again.
3) "Grexit" - Greece leaves the EU
Even the CEO of PIMCO labeled this "inevitable" in 2012, advising investors to prepare for dramatic fallout in the Euro zone (read in "sell European stocks"). As it turned out, Greece approved a harsh 2013 budget, is heading toward a sustainable debt path, and euro zone stocks outperformed U.S. stocks.
4) Gold Rush
Owners and sellers predicted gold would go from $1,600/oz. to $2,000/oz. It was flat. Silver had a great year though!
5) U.S. bond bubble
As bond prices rise with demand their yields drop. Money poured into Treasuries pushing prices up and the 10 year yield down to 1.6% in 2012. Still, rates will go up sometime so this prediction seems a given sometime…until you read the next prediction.
6) Japan crippled by debt crisis
Japan's public debt is more than double the size of its economy. The government continues to issue bonds en masse to be purchased by its central bank. If you think our 10 year rate is low, try on .68%.
Yet Japanese bonds continue to firm and the Nikkei (Japanese stock index) was up 25% for the year.
7) Double Dip Recession in the U.S.
This has been a popular prediction since 2009. As we have a recession every 4 years on average I don't discourage those who like to predict them. But how many more years have to go by before you can't call it a double dip anymore?
8) The Euro crashes to parity with the dollar
With all the concerns in Europe, its currency crashing seemed like a shoe in. That hasn't come close to happening; and the case for such has substantially weakened. The Euro to Dollar ratio remains about 1.3 to 1.
9) And finally…drumroll please…the world ends on December 21st
Thank God predictions are so unreliable!
With that – here are Becker's ultra secure predictions for 2013 you can take to the bank:
1) The U.S. economy (GDP) will come in somewhere between -4% and 6%.
2) The stock market will return in the range of -20% to 40%.
3) The world won't end.
If I'm wrong about that last one…feel free to sue me.
As always, I welcome your questions and comments…and don't make investment decisions based on predictions.
Marc Becker, AIF
Managing Partner, Wiser Financial Coaching
Columnist, The Advisor Sherpa
To read past articles and view past videos, visit: www.marcbecker.tv
becker@wiserfinancial.com
For more info on the predictions above see: http://www.cnbc.com/id/100282664
Trivia Time
This week's question: It's award season once again! Who are the youngest and oldest actors/actresses to be nominated for an Academy Award?
Do you know? E-mail your answer wendy@wiserfinancial.com and if you are correct, receive a free "Way to Go!", "You Rock!", or other congratulatory phrase. Then brag to all your friends about how smart you are.
The answers will be in next week's newsletter!
Last week's question: In computing, a megabyte is 1,000 kilo bytes. A gigabyte is 1,000 megabytes. Now we are seeing computers with a terabyte, which is 1,000 gigabytes. So what is next-- what is 1,000 terabytes called?
Answer: A Petabyte.
Dick W. and Stoyanka K. got the answer right! Congratulations, way to go!
|
No comments:
Post a Comment
To Leave a Comment Choose The Name/URL Drop Down. You Do Not Have To Enter A Website Just Your Name