Jan 9 2014, 12:05pm CST | by Forbes
I thought it was a good point to review my pontificating in 2013. So I’ve pulled all my articles from the year to see if I’m a dunce.
This is what I found from the run up to summer 2013:
The U.K. will never leave Europe. The referendum will never happen. (See What If The U.K. Leaves Europe?)
The ruling U.K. Tories are still promising this but in 2017, whether they will win the next election in 2015 is unknown. If they do, will they follow through? If there is any chance of this happening, there will be an increasing anti-Europe drumbeat to create the voter storm needed to re-elect the Tories on an anti-Euro ticket. Anything short of a thunderous anti-Brussels campaign means the policy isn’t real. We are yet to hear it.
Apple will revert to $200 to $300 a share. Unless Apple comes out with a new miracle product, we have seen the top of the Apple stock price. Competition will erode its margins and likely in time its sales. iPhone and iPad will go the way of its computers and iPod, where sales are falling. (See Here’s What’s Next For Apple)
Apple was above $500 at the time and went below $400 by mid-summer. It’s back up a few percent from this bearish post after a strong rally alongside the market. The efficient market says the best prediction is always to state the price will be unchanged over any time frame. So I guess I have to accept mostly wrong on this call, but I remain stubbornly bearish.
Seeing as the Dow was 14,000 at the time, 15,000 was a brave call. Remember: articles are permanent so even the best pundit is going to be wrong a lot and on record. If you don’t wish to appear an idiot this is a sobering prospect.
At the time of writing I couldn’t believe my own chart so I thought I’d give 16,000 more time to brew. That is still the best call because to predict the market will rocket like it has is just too aggressive.
However, to make money in the market the only thing you really need to know is the direction; ‘when’ is secondary within reason. So I like this prediction.
Over the years my Dow calls have been pretty good. My most recent prediction, for 20,000, is insanely aggressive but if we don’t hit an iceberg, I believe we are heading there.
Apple is a bubble. (See Is Apple’s Future BlackBerry, Microsoft Or Amazon ?)
Yep still a bubble, dammit! In the end all bears get their crash but that doesn’t make the prediction smart. The recent apple rally was strong, but I still see the stock as in a post bubble dynamic. The glory days are over. My key point with all-star stocks is, don’t have so much of them that you can’t afford for them to fail. By all means own some Tesla, but don’t put your financial wellbeing on the line for it. People do and time and again get horribly mangled.
If trade is not balanced the developed world will simply become poorer and poorer at best until it is as poor as China, Russia, and Brazil etc. (See We’re All Currency Manipulators These Days)
People are asking, why do people from the BRIC own all the expensive real estate in our capital cities and we can’t afford to live there? The answer is, they are rich and you are poor. People confuse rich countries with ones in which their citizens are also rich in. When countries take all of private sector GDP in tax, the people are poor, meanwhile the states that rule them are rich. China and Russia take 25% of private sector GDP in tax and their citizens have money. In places like Denmark the state takes more than 100% of private sector GDP in taxes and their citizens have to borrow just to make ends meet. Are you rich if you have to borrow just to live?
Groupon, Zynga are all overvalued. Linkedin is a bubble but isn’t close to the top yet. Google will breach $1,000. (See Reality Checks For LinkedIn, Zynga, Groupon And Google)
Groupon zoomed. Zynga fell by 33% then crawled back in the Nasdaq boom to put on 15% or so. LinkedIn zoomed 60% and pulled back to about 30% by year end. Google went from $800, smashed $1,000 and is now about $1,100.
Apple short, Facebook long back in June 2012. Facebook was $31, Apple was $584. At the time of this article Facebook is now $58, Apple $543. Apple was $449 and Facebook $27.39.
That’s a 47% profit since the summer of 2012 with the added benefit of hedging the general technology frenzy. However, who would do that trade? It’s too boring for anyone up to their neck in dotcom2.
And so it was. Why? I believe that the May dip is a sovereign wealth fund rebalancing event. Their strategy has changed. They have gone from pro bond to pro equity. As such the rebalancing didn’t hit stocks so hard as the flow was towards equities that softened the disruptive effects of this yearly process, but it did smash gold.
I might be mad but the call was good.
Will you remember? I’ll remind you if I’m right in 6 years. There is of course no inflation in the developed world, it is just the things you are buying that have gone up in price. That’s nothing to do with CPI, how could it be?
May 15 Nikkei closed at 15,096. On May 23 it hit 15,942. I drew a chart that said watch out at 16,000 and as if by magic the price pulled back 2,000 point in 2 days.
Wow, not bad, almost makes up for Apple!
I won’t write anything about the next six months as it’s still a bit too early to look back on these predictions. Tesla did spectacularly fold when I said it was a bubble. I did say love the Twitter IPO before everyone did and call a 10% Apple rally, but that’s better left for six months hence.
I hope you made some money from my thoughts and I hope I can continue to get it right for you, apart from Apple of course.
Source: Forbes Business
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