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Melaschasm (57.74)

2012 Predictions

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January 01, 2012 – Comments (6)

1.  The S&P ends the year around 1400.

2.  My CAPS score ends the year above 500

3.  Real Estate prices bottom in 2012.

4. Real Estate prices finish the year with at least three consecutive monthly YoY increases.

5.  The unemployment rate stays above 7% all year.

6.  Core inflation for the year will be between 3 and 4 percent.

7.  Crude oil will mostly stay in the $80 to $120 range this year.

8.  US Interest rates will not change much this year.  

9.  The Euro will still be the currency for most of Europe a year from now.

10.  Being long S&P 500 will be more profitable than being long gold.

 

6 Comments – Post Your Own

#1) On January 02, 2012 at 12:25 AM, HarryCaraysGhost (99.63) wrote:

Any thoughts on the Dow? heres a contest-

http://caps.fool.com/Blogs/a-contest-of-sorts-the/685507

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#2) On January 02, 2012 at 2:45 AM, JakilaTheHun (99.93) wrote:

I agree with most of these; or at least view most of them as having reasonable probability. 

Inflation might be the only one I have a differing view on.  As commodities continue to crash and the economy is really only is the beginning stage of a recovery, I think CPI inflation will stay very low (0-2 percent).

I think unemployment comes down this year, but don't know that it will get below 7%.  Maybe below 8%. 

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#3) On January 02, 2012 at 2:35 PM, Melaschasm (57.74) wrote:

Jakila,

I am thinking the same thing regarding unemployment.  The one wild card is the very unlikely possibility that benefits are not extended.

Regarding inflation, housing (rent) about 40% of the CPI and likely to rise a little this year.  Also, most of the commodity price increases have not worked their way into higher retail prices.  As long as commodities are flat, I believe we will see rising inflation this year.

However these predictions work out, it appears we will be living in interesting times...

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#4) On January 02, 2012 at 11:26 PM, EnigmaDude (82.91) wrote:

Ancient Chinese curse,"may you live in interesting times"...

I agree with most also (esp. #10) but do not see unemployment below 8% nationwide.  Also feel that inflation will be low in 2012.  Oil prices will go higher than $120 but won't stay there unless Iran gets aggressive and China resumes their growth.

I just hope my CAPS score stays ahead of the S&P!

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#5) On January 03, 2012 at 4:18 PM, rfaramir (29.33) wrote:

 

"1.  The S&P ends the year around 1400."

 

So about 9.5% inflation in the stock market? Sounds about right. 

 

 

"2.  My CAPS score ends the year above 500"

May you be so blessed! 

 

"3.  Real Estate prices bottom in 2012."

I suspect you're a year or two too early on this. Start to bottom out, yeah, but there's still too much construction, too much inventory, too much shadow inventory, and too many defaults still to happen.

 

"4. Real Estate prices finish the year with at least three consecutive monthly YoY increases."

That's the specific wishful thinking of #3. 

 

"5.  The unemployment rate stays above 7% all year."

Easily. Probably above 8% 

 

"6.  Core inflation for the year will be between 3 and 4 percent."

Unless they reformulate it. Again. But actual inflation will be higher. 

 

"7.  Crude oil will mostly stay in the $80 to $120 range this year."

Not likely. Iran alone will make it pop above $120, probably more than once. The Fed's money printing policy would make it rise continuously all year, but of course it won't be smooth. 

 

"8.  US Interest rates will not change much this year."

They ought to rise, but you're probably right, since the Fed has committed to keeping rates at about zero until they're re-elected Obama. (Not that they stated it that way.)

 

"9.  The Euro will still be the currency for most of Europe a year from now."

It's dying, but you're probably right for this year.

 

"10.  Being long S&P 500 will be more profitable than being long gold."

That's a hard one. Both are better than cash or bonds due to inflation, but which to pick?


 

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#6) On January 03, 2012 at 9:37 PM, Melaschasm (57.74) wrote:

I may be early on real estate, but I feel confident that the recovery will begin sooner than people expect.  While I agree that there is significant shadow inventory, I also think there is much more demand waiting for the bottom than is commonly reported. 

I expect unemployment rates to improve as people who have collected 99 weeks either retire or get a job.  I also expect a higher volume of real estate sales to result in an uptick in construction/repair jobs, even if the real estate prices do not increase.  

While we may see a brief spike from Iran or some other fear, I do not expect war with Iran, or any extended disasters.

We just had a weak year for the S&P, while Gold has increased in price much faster than inflation for a decade.  I think we are going to see a few years of inflation catching up to gold prices.  A solid year for the S&P should beat gold. 

If we end up with a war, or even some extended bombing of Iran, my predictions will mostly be wrong. 

 

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