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