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My 12 bold predictions for 2012 (which will make you richer, sexier, and happier than you were in 2011)...

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December 30, 2011 – Comments (22) | RELATED TICKERS: NFLX , DOW , RP

Before I start with my 2012 predictions, let me first tell you why you are smart to read my 2012 predictions: Portfolio of 11 stocks, which I picked as best plays for 2011, returned a whooping -17% in 2011.

Now, I know that comparing this to S&P 500's return in 2011 (pretty much 0%), negative 17% might not look like much, but comparing to Motley Fool's Hidden Gems all-time performance (50 percentage points behind S&P 500's performance), I think my 2011 picks did extremely well (plus, Hidden Gems team charges $199 fee for their picks, and my picks were free).

Now let's take a close look at my 2012 predictions.

This year, I'm going to be much smarter about making my picks and predictions. I'm actually going to listen to my psyhiatric's advice of "setting lower, more achiveable goals" (that was her suggestion on how to help myself get rid of the constant feeling-like-a-failure feeling).

I will also actually make only 6 predictions this year, which cuts a chance of me being wrong on all 12 predictions in half (50% instant improvement in my prediction accuracy).  

So here they are:

1. Netflix (NFLX) will not get back to $300 in 2012

Why I think so? Well, even though Netflix has some good things going for it (very loyal and ever growing customer base, huge collection of movies most of us never heard of, etc.), I think $300 is a little too much to ask for in 2012. To be clear, this prediction is not based on any fundamental or technical analysis of NFLX, bust strictly on a simple math. Even though it might not look so at a first glance, going from $70 $300 is nowhere easy as going from $300 to $70 (even though the numbers are the same, direction of the movement does matter). In other words, math will be against NFLX in 2012, and my money is on math.

2. S&P 500 and DOW will stay closely correlated

Why I think so? Even though there are 17 times more companies included in the S&P 500 index (500) than in DOW (30), these two indexes tend to move in a similar fashion. Now, I know that one would normally think that every move in DOW, of let's say 1%, would be followed by 17% move in S&P 500, but that's simply (for whatever reason) not the case.  If you take a look at the chart of the two, you will see that these two indexes almost always move very closely (at last they have for the last 10 years - as the chart below shows). Now, I'm no brain surgeon or technical analyst, but I don't think it takes much to figure out there is a strong trend in works here, my friends. And based on the fact that TREND IS YOUR FRIEND, I see no reason that this trend will be broken in 2012 (p.s. There is money to be made here if you understand how this correlation trend works: If you think the DOW will go up and invest money in it, you can then invest the same amount in S&P 500 as well, thus doubling your profit - you win on both, kinda deal, or so called "WIN-WIN" situation). 

 

3. Ron Paul is not going to win Republican nomination in 2012

Why I think so? Well, this is another one of the "trend is your friend" predictions. Even though I hate to disappoint many of the CAPS members, I have a hint for Ron: If you tried 6 times to run for a president, and you haven't been picked once, most likely you won't be picked on the 7th try. Plus, after a certain age, the experience advantage starts to work against you and you lose apeal with a younger female voting-population (look at your and Mitt Romney's hair). Another trend in the works here: Nice guys finish last. And that ain't changing in 2012.

 

The other 3 predictions will be revealed tomorrow...

22 Comments – Post Your Own

#1) On December 30, 2011 at 6:21 PM, portefeuille (99.51) wrote:

make only 6 predictions this year, which cuts a chance of me being wrong on all 12 predictions in half

actually you increase you increase your risk of being wrong on all predictions. if the events being wrong on prediction p_i are uncorrelated and equal p(p_i) = 1/2 you increase your risk from

1/2^12 ≈ 2.4 * 10^(-4) to

1/2^6 ≈ 1.6 * 10^(-2).

so you increase your risk by 2^6 = 64. better make 24 predictions ...

 

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#2) On December 30, 2011 at 6:23 PM, portefeuille (99.51) wrote:

you increase you increase

you increase

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#3) On December 30, 2011 at 6:46 PM, portefeuille (99.51) wrote:

uncorrelated

independent



enlarge

(from here)

 

 

and my money is on math

always a good idea!

 

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#4) On December 30, 2011 at 9:39 PM, whereaminow (20.42) wrote:

Enjoyed it.

Here's my 1 prediction for 2012:

Mitt Romney has ZERO chance of winning the Presidential election.

David

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#5) On December 30, 2011 at 9:53 PM, whereaminow (20.42) wrote:

Also, the DOW just had its best quarter since 2003, something I talked about in my "bet" with StatsGeek. I think you have been as bullish as me.

Sit tight, next 2 quarters will be a wild ride, but up.

David

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#6) On December 30, 2011 at 9:53 PM, AvianFlu (40.18) wrote:

David:

I hope you are right. But I do not share your confidence.

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#7) On December 30, 2011 at 10:00 PM, skypilot2005 (< 20) wrote:

On December 30, 2011 at 9:39 PM, whereaminow (92.51) wrote:

Enjoyed it.

Here's my 1 prediction for 2012:

Mitt Romney has ZERO chance of winning the Presidential election.

David"

I agree.

Bachmann is the best qualified Republican but, is going to have a problem with older Republican male and female voters.  Too bad.  I think she could beat OBummer in a general election.

After reading Port's posts, I have to take a nap, now.

Sky Pilot

 

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#8) On December 31, 2011 at 1:53 AM, motleyanimal (89.74) wrote:

Wait till the sun shines Alstry.

And the clouds go drifting by

We will be happy Alstry,

Don't you cry.

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#9) On December 31, 2011 at 4:36 AM, ikkyu2 (99.32) wrote:

Pearson's r for the S+P 500 and DJIA is 0.96, year in and year out - almost perfect correlation.  The market cap of the DJIA itself makes up more than 10% of the S+P 500's market cap, so that portion is perfectly correlated; the rest of the market tends to move in lock step.

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#10) On December 31, 2011 at 7:23 AM, itsallluck (< 20) wrote:


   Seeing the predictions for the republican canidates, looks like Obama for four more years. 

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#11) On December 31, 2011 at 11:00 AM, MoneyWorksforMe (< 20) wrote:

portefeuille,

The chance of him being 100% correct on all 6 predictions is far greater than him being 100% correct on all 12 predictions.

The math you did above is correct, but I think it would be better to think of it in terms of percent

i.e. 12 predictions gives a ~0.02% chance of being 100% correct.

6 predictions gives a ~1.6% chance of being 100% correct.

Just as you would expect flipping a coin...Doing it once is a 50% chance, you get heads. twice 25% and so on and so on. Each time you add another flip, the chance of getting all heads decreases by half...

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#12) On December 31, 2011 at 11:57 AM, portefeuille (99.51) wrote:

#11

make only 6 predictions this year, which cuts a chance of me being wrong on all 12 predictions in half

it was about exclusively making wrong predictions, not right ones ...

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#13) On December 31, 2011 at 12:44 PM, MoneyWorksforMe (< 20) wrote:

......

 

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#14) On December 31, 2011 at 3:03 PM, JakilaTheHun (99.94) wrote:

This is the lamest set of predictions ever, but I rec'd it anyway! :P

My predictions:

(1) Neither JakilaTheHun nor DragonLZ will have a CAPS score of +90,000 by the end of the year

(2) A large asteriod will not hit the Earth, thereby killing 99% of the population, and forcing the survivors to become hunters and gatherers again and start everything anew!

(3) Michelle Bachman will not win the Republican primary. 

I have a feeling I won't be wrong, either :)

 

 

I do think David is wrong about Romney.  I'm not much of a Romney fan, but it's looking like Romney vs. Obama right now, and I think Romney has at least a 50% chance in that match-up.  (Full disclosure:  I'm rooting for Jon Huntsman, but will probably vote for Gary Johnson as the Libertarian candidate if Huntsman isn't the GOP candidate.)

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#15) On December 31, 2011 at 5:46 PM, skypilot2005 (< 20) wrote:

On December 31, 2011 at 3:03 PM, JakilaTheHun (99.93) wrote:

"I'm rooting for Jon Huntsman, but will probably vote for Gary Johnson as the Libertarian candidate if Huntsman isn't the GOP candidate."

A vote for Johnson  would be a vote for OBummer.  Why not just pull the lever directly for him?

Review the history of third party canididates, my friend.

I don't like it but, we only have 2 viable Parties.  OBummer is going to be nominated by the Democrats.  The only chance we have is to get a half way decent Republican candidate.

 

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#16) On December 31, 2011 at 6:07 PM, whereaminow (20.42) wrote:

This statement:

The only chance we have is to get a half way decent Republican candidate. 

is not equal to

Mitt Romney

A vote for Johnson  would be a vote for OBummer.

Who cares? This isn't a game. Vote with your principles. Let Obama win with 42% of the vote, for all I care. The only "mandate" any President can ever have is the powers vested in the Executive Branch via the Constitution.  Outside of one exception, neither I'llBombYa or the other war mongers care about that.

So I don't care about them.  

Romney has less chance of beating Obama than McCain did.  Fewer people support the mainstream BloodLust GOP than they did in 2008.

In other words, he has ZERO chance. 4 more years of Obama unless GOP voters start supporting the one man that has principles.

Let's face it, Romney supporters can be told who to vote for. We can't.  If Romney beats Paul we'll piss on the ballot before we help him.  On the other hand, Romney supporters would compromise and vote for Paul.

That's pretty easy math.

David

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#17) On December 31, 2011 at 7:06 PM, dragonLZ (99.45) wrote:

 portefeuille and  MoneyWorksforMe, there is no shame in admitting you don't understand something (especially complex calculations involving percentages).

Actually, for Porte I think the problem might be in the fact that he is making calculations in metric (European) percentages while I was using American percentage units.

So let me walk you through my calculation again.

What I meant is: If I make 12 predictions and I'm wrong on all 12, that's 100% inaccuracy.

If I make only 6 predictions instead of 12, and I'm wrong on all 6, that's only 50% inaccuracy (6/12 x 100).  

Got it? I'm sure you did. I know sometimes it just takes one more time to hear or see something in order to completely understand it.

Once again, I'm glad you commented on my post as it makes me happy whenever I can help.

Happy New Year,

DLZ

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#18) On December 31, 2011 at 7:13 PM, dragonLZ (99.45) wrote:

whereaminow, I'm glad you enjoyed my predictions, but could you plese refrain from turning my post into your "Vote for Paul you idiots" political platform. 

Thank you.

And Happy New Year.

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#19) On December 31, 2011 at 7:58 PM, devoish (98.54) wrote:

I've been watching the Republican primary process. It is pretty clear that the Republican party does not consider selecting a candidate important. 

Ron Paul is the only Republican candidate that President Obama could lose my vote to, though he is more likely to lose it to the Green Party.

Best wishes,

Steven 

 

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#20) On December 31, 2011 at 10:21 PM, dragonLZ (99.45) wrote:

David, you misunderstood my comment.

I love you, man.

 

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#21) On January 01, 2012 at 7:52 AM, skypilot2005 (< 20) wrote:

A vote for the Libertarian candidate IS just a “game”.    They will not win the election.

I don’t care for Romney.   Call me a bigot but, I can’t get beyond the Morman “thing”.   It is a core values issue with me.

For the record, I feel Bachman is the best candidate actively seeking the Republican nomination.

Paul?  He is too far out of the mainstream on foreign policy to beat OBummer.  Remember, we are dealing with a basically uninformed electorate.   The “math” doesn’t get any easier than that.       The Democrats and media would have a field day running his quotes.

Given our choices, Bachmann currently has the best chance of beating OBummer.

She is very smart and conservative.

“Who cares?”  Why give Barry another 4 years?   That’s what we will do if we don’t vote for a candidate that has a chance to beat him.

Sky Pilot

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#22) On January 02, 2012 at 3:46 PM, JaysRage (88.78) wrote:

So far I agree, so this must be humor.  : )

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