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Thursday, January 1, 2009

2009 Predictions

2008 has been brought to a close, and I would like to start an annual tradition of making annual predictions.

My original prediction that I made to a friend in December 2006 was market crash in 2007.....I was a tad bit early, crashed in 2008. Since my "awakening" in August 2006, I read and learned from every turn of world events unfolding. Each event has taught me more about human nature, politics, and finance. Some of the missed opportunities where unimaginably huge. Such lessons get your attention, and make you a better person to learn from it.

I'm hoping I am becoming more accurate in my time line, and the person I am now would not have predicted complete collapse in 2007. I have learned the world moves slowly, but when the panic hits the heart of people, it moves quicker than anyone can imagine. In large numbers, fear is more powerful than greed.
2009
  • Obama cannot save the USA and the world in 2009.
  • DOW will hit below 6,000 (I'll take ANY bet on this one). And it wouldn't surprise me to hit DOW 4,000. (over 50% drop from current position)
  • Unemployment will hit 8% in 2009 in official figures, unofficial (REAL) numbers easily top 12%
  • The housing collapse is 50% there, as per my previous entry. The NorthEast will see acceleration as the financial market layoffs take effect in the region.
  • All countries will continue to race to devalue their currencies. The race to devalue will help ensure the US Dollar doesn't collapse as compared to it's peers.
  • Gold, Oil, and resource plays are NOT guaranteed safe heavens, but over all investments, it will fair pretty well compared to the alternatives. See previous bullet as to why. GDX will hit 55 a share in 2009, wouldn't surprise me if this occurs in Q1.
  • Counties and states will face financial crisis, as many as 5 counties will outright fail in 2009, causing municipal bonds to sway.
  • Deflation will "win" in wages, stocks, and real estate.
    Inflation in Gold, Oil, or Food, will occur in 2009.
  • The ETF SRS will hit over $200 a share in 2009, currently at $53. May hit $25 before $200. Over $500 a share would shock me.
  • More insurance companies will have severe financial issues.
  • Stock DECK (at 80 now) will trade at below 25 a share by Jan 2010 (may need extra month for earnings report)
  • Oil will hit 50 bucks a barrel in Q1 2009. Oil will hit over 60 a barrel before EOY 2009.
  • With all this doom and gloom, predict the market WILL RALLY, sometime in Q1/Q2, and fool people into thinking the market has recovered before failing again. From 2009 market top to bottom will exceed 50%. (hence why I am long currently resource stocks/oil)
The above I truly believe will come true, below I have less faith in, but still think are
reasonable.
  • China will NOT save the economy of the world, but will continue to slowly open their financial markets in preparation to offer world investment in a future attempt to ursurp the US as world leader.
  • Gold will make a new high 2009, but may also hit 600. I would be surprised if gold hit over 2,200 an ounce. (triggered by world panic or countries resorting to buying gold to build faith in their financial systems) GDX would surprise me if it hits over 100 a share.
  • Oil could hit 100 a barrel in 2009 due to political events, but I would be surprised if over 125.
  • Another country will fail, like Iceland did, in 2009. Not in the same exact manner, but will collapse. Over 4 countries would surprise me.
  • Trade barriers start to erect, causing shortages and some pricing issues with specific resources.
I take NO PLEASURE in this doom and gloom view. If you know me in real life, you know I am an optimist (thanks happy john). But I am brutally logical, and the facts presented to me lead me to the predictions above.

I encourage people to use the Comment section to make their own predictions.

Some other blogger predictions worth reading are:
Mish (the BEST financial blogger on the NET)
Frank Shostak (Economist)
Karl
Gary
Roubini (economist/blogger)
Mish explains why money give-a-way will not work

For fun, "Best of 2008" pictures below. WARNING: Some pictures are extremely graphic.
Best of 2008 Pictures, Part 1
Best of 2008 Pictures, Part 2
Best of 2008 Pictures, Part 3

UPDATE 7/10/09: 2009 predictions revisited, half way to hell

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