A year ago I made a point of logging some of the year-end predictions that the Smart Money People throw out there for info-mind-candy to impress us. Most of the time sadly those predictions end up in disappointment, yet as human beings we just love to eat up anything coming from the self-professed Soothsayers who somehow think they this gift to see into the future. So let's go to the list! My comments in bold.
January 3, 2014
Here are some notable predictions from some Smart Money People:
Ralph Acampora (New York Institute of Finance): I am bullish for 2014 but I expect some kind of correction (maybe a bad one) during the year. So, I would start accumulating the VIX as the early rally continues.
There were some start/stops in terms of corrections, but the Teflon stock market continued to hold strong in 2014.
Brian Gilmartin (Trinity Asset Management): Synchronous global economic recovery will occur faster than many think, which will cause global interest rates i.e US Treasuries, Japan govt bonds, German sovereign debt rates to rise in a correlated fashion… The risk is shifting from “it’s worse than we think” to “It’s stronger than we think”.
Interest rates if anything tracked downward in 2014 thanks to aggressive money printing in Japan. Eventhough the US Federal Reserve began the process of tapering money printing, a lot of money was still slushing around looking for a semblance of yield.
Greg Harmon (Dragonfly Capital): Boring old materials will be big winners. Steel (AKS, X), cement (CX) and aluminum (AA) all moving out of long bases.
Hand wringing about the China economy slowing down, kept the rocks and materials sectors down in 2014. Oh yes, AKS was down 27%, X was down 8.3%, CX was down 10.4%, and AA was up (thank goodness) 49.8%.
Gregor Macdonald (TerraJoule): Oil will finally begin its next repricing cycle late in 2014. It will begin quietly, and will bring together many of the same factors that led to the previous repricing, which began in 2003. Spare capacity, the cost of the marginal barrel, and the continued decline of the cheap barrel will all confront a new upswing in global demand. The upswing in demand will largely be led by a return to global growth, even as renewables and the powergrid will become the main avenue for global GDP. Oil's next repricing will not be as dramatic in percentage terms. But the road to $150 oil begins in late 2014.
$150!!! Oil closed yesterday at $53 and change driven by a strong US$ and a bumper crop of oil production from shale deposits in the US Midwest along with falling global demand.
JC Parets (All Star Charts) Crude Oil prices double in Gold terms. $CL_F/GC_F currently at 0.08 - goes to 0.15+. Interest rates see 2% before 4% (10yr). Corn Rallies 30%. Blackberry doubles in Price. And Lebron ends the regular season shooting 50% better from the field than Carmelo Anthony.
Oil we know. Corn fell 4.1%. Blackberry went up 61.1% and Lebron changed his mailing address.
Scott Redler (T3 Live) While Microsoft (MSFT) has come a long way in 2013, I think it still has a ton of potential going forward. The stock provides the rare combination of value AND growth in one package. The company sits on a pile of cash but current leadership has never really known how to deploy it effectively. With Ballmer stepping down they have the chance to go from tech dinosaur to an innovator again if they can find the right person - much like we saw with Yahoo! and Marissa Mayer this year (which was one of my top 2013 picks). The stock also offers a hearty 3% dividend yield. From an anecdotal standpoint, they now have a phone that stands out a little but in the Nokia Lumina with 41 megapixel camera, and I think the new Surface Pro tablets are pretty cool - sort of like a laptop and tablet in one.
MSFT ended the year up 25.3%.
Eric Jackson (Ironfire Capital): (SFX Entertainment (SFXE) will do very well. Electro Dance Music (EDM) is not a fad but the fastest growing music niche that’s here to stay and SFXE is the purest play way to ride its success through the growth of festivals, music, DJ talent, merchandising and sponsorship. CEO Bob Sillerman knows how to make money.
SFXE ended the year down 62%
Brian Sozzi (Belus Capital): Wal-Mart’s stock is up a meager 11.83% in 2013, but it could finish in the red next year. Here is what you won’t hear anywhere else: Wal-Mart will issue a 2014 EPS warning in mid-February that hits the stock, due to a post-holiday inventory build brought on by aggressive HQ ordering and cautious consumers. Wal-Mart will announce a restructuring plan under its new CEO (focus: closing underperforming U.S. and international stores) that ratchets up the fear on the internal health of the company amongst the usually bullish Street.
A sticker is given for the warning as Walmart indicated it’s Q1 numbers were horrible. The stock still ended the year up 9.7%. Thank you Janet Yellen. This pretty much sums up the stock market in 2014.
Scott Krisiloff (Avondale Asset Management) We'll start to see signs of inflation for the first time in five years. The yield curve will flatten. The Fed will be viewed as acting too timidly. The economic cycle will crest, along with share prices. Democrats will win control of congress.
The banking system will finally put the ghosts of 2008 to rest and there will be consolidation among small and mid cap banks. Consumers will continue to focus on quality of life. That means eating healthier, building relationships and taking time for leisure. Unfortunately for capitalists it doesn't mean spending more.
Apple will release an iPhone with a bigger screen. More consumers will cut their cable subscriptions. More advertising dollars will be spent online. The PC market will stabilize
Stickers for the iPhone big screen, cable cutting, PC market stabilization. Sacks of coal on the Dems making gains, and the inflation call.
Craig Johnson (Piper Jaffray): We are on track to achieve our SPX 2,000 price target next year, possibly earlier than we thought. We suspect 2014 will be a good but not great year, up high single to low double digits on the S&P 500.
S&P tracking to end year in the 2070 range.
Jamie Lissette (Hammerstone): Bitcoin crashes and trades below 100.
Bitcoin closes the year at 317.02 per US$.
Joe Donohue (UpsideTrader): Best Buy revisits the teens.
Best Buy which many analysts said was a company that was dead in the water because of the show rooming effect and online competition from Amazon finished the year at $39.27, down 1.5% on the year and almost 400% higher since the Smart Money People started predicting their demise.
Andrew Thrasher (athrasher.com) Commodities were hated for nearly all of 2013 with the CRB Index off nearly 4% and gold down 27% through December 22nd, while the equity market has moved higher by almost 30%. Sentiment for agriculture and metals are at or near historic lows. For example, nearly all three categories of the Commitment of Traders report, Commercial, Large Traders, and Small Traders are short or near a net-short position for gold. Typically we see the most hated areas of the market one year rotate back to strength the following year. I'll be watching to see if this happens for the commodities market in 2014. While commodities are very weather dependent, there's a chance we see at least a partial rotation back to the beaten down agriculture and metal markets.
The iShares global agriculture ETF finished the year up 15%. Sticker for willing to make a call against the herd.
Quint Tatro (Tatro Capital): We see a major shift into base metal, energy and all things NON-Precious metals in commodity land.
Copper down 16%, Platinum down 11.7%, Silver down 17%, Crude Oil down 46.4%, Nat Gas down 28.5%
You want some more stock picks?
On January 3, M Partners threw out a list of their top stock picks for 2014. Here they are and their results for the year:
Counsel Corporation -24.2%
Enterprise Group -47.4%
Lake Shore Gold Corporation +57.7%
Mainstreet Equity Corp +3.1%
TAG Oil Ltd. -53.5%
Oh dear. So glad at least the Lake Shore gold worked out.
On August 22, 2014, here were the predictions of where the S&P500 would finish at year end. That day the S&P was trading at 1988.40. Today it closed at 2076.
Stifel Nicoleus 2300
More stock picks
On September 4, 2014, Marketwatch posted a piece on 15 stocks to bank on to ride out the year. Below is how they’ve done since then.
Delta Airlines +27.74%
EOG Resources -13.63%
Cummins Inc. +1.21%
Monsanto Inc. +4.47%
Actavis Plc +13.92%
Comcast Corp +6.52%
Netflix Inc. -27.97%
MetLife Inc. -0.91%
Mastercard Inc. +14.56%
American Tower +66.37%
Facebook Inc. +3.92%
McKesson Corp +7.31%
Williams Companies -23.77%
10 out of 15 companies were positive at year end with 4 of the 10 generating double-digit returns. Haliburton, Netflix and Williams Companies really brought the group back.
Just one. Predicting what is going to happen 10 minutes from now, let alone 1 year from now is a fools game. As much as I can tell people to just don't go there, people will and people will make investment decisions based on them.
I'll leave you with one prediction for 2015. Stocks will go up and stocks will go down. There will be companies that are creating tangible wealth and managing their scarce capital effectively for their shareholders.
Now go out and find them.