'09 Prediction Recap

Here are the predictions I made at the beginning of the year and a recap of how things actually turned out.

1) The most beaten down asset classes from '08 (housing, financials, emerging markets) will be some of the best performing in '09. Grade = B-

S&P Performance = 30% gain

Housing (REIT's) = 40% gain

Financials = 25% gain

Emerging Markets = 75% gain

I hit the emerging market prediction out of the park. Less enthusiastic about financials and housing. I would have been much better off including technology in this list (60% gain).

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2) Oil prices, which have plummeted from $147 a barrel to just around $35 a barrel, will reverse course and revisit the $70 to $80 range in '09. Grade = A+

Oil spent the majority of the year trading between $60 and $80 a barrel. The high for the year was $82.

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3) The unemployment rate which currently sits at around 7%, will top out at 11% in '09. Grade = B

The unemployment rate hit 10.2% in 2009

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4) The stock market bottomed on November 21st @ 7,392 on the DOW. Although the real economy will not start to see recovery until late '09 the stock market lows of late 2008 will hold. Grade = B-

The stock market bottom did not hit bottom until March at 6,500 on the Dow. However the real economy did begin to pick up in the 3rd and 4th quarter of 2009 as I predicted

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5) The big three automakers will be back in Washington asking for additional aid in '09. As time progresses it will become increasingly clear that although the company is weak, Ford is the strongest of the three companies. The electric car will dominate the discussion in '09 and will become a sustainable reality in 2010. Grade = A+

The major automakers were all in the news in 2009 as they pushed Congress for additional aid and provided the catalyst for the cash for clunkers program. The electric car race heated up in 2009 and electric cars are expected to hit showrooms in 2010. General Motors and Chrysler struggled mightily in 2009, Ford on the other hand saw its stock rise almost 350% in '09.

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6) The Obama administration will hit the ground running with a massive stimulus package that attempts to address unemployment and the stalling economy. By the end of '09 talk will heat up about how the government has become too involved in the economy and calls for the "uncanny" power of free markets will return. Grade = A

$700 billion+ sure counts as massive in my books. Regarding the talk of government involvement in the economy all you have to do is look to the debate surrounding restrictions on pay and financial regulation to realize that the "free market cheerleaders" are back.

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7) It will become increasingly clear next year that our world's most precious resource is not oil, but water. Today, almost one in eight people in the world do not have access to clean drinking water. By 2025, more than two billion people are expected to live in countries that find it difficult or impossible to mobilize the water resources needed to meet the needs of agriculture, industry and households. Going green will no longer be a buzzword, it will become our generation's race to the moon. Grade = B

Going green most certainly gained steam in 2009. Companies now speak openly on sustainability and individuals are becoming increasingly aware of their carbon footprint. Water shortages received national news attention in 2009 and that shows no signs of abating.

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8) This amazing influx of government intervention will result in the inevitable uncovering of scandals and bribery with relation to the financial crisis. The programs have been thrown together, and oversight has been lacking, a recipe for disaster anywhere, especially in Washington. Grade = A-

The outcry over the government interaction has been unrelenting. It is hard to get accurate estimates on fraud but Marketwatch and Dow Jones have estimated fraud on stimulus money at more than $50 billion.

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9) The stock market volatility in '09 will pale in comparison to the volatility in '08. In the end the market will be positive for '09 in the realm of a 10-12% return on the Dow for the year. Grade = B+

The VIX is a measure of stock market volatility. This index went above 80 in 2008 representing huge volatility in the markets. In 2009 the VIX spent the majority of the year below 40 and is finishing the year as at around 20. My prediction on the return for the index was on the low side. The Dow gained about 25% on the year.


Coming Tuesday, 10 predictions for 2010...

Top 10 Searches of 2009

Yahoo just released their annual tally of the top 10 search topics of the past year:

1) Michael Jackson

2) Twilight 2

3) WWE

4) Megan Fox

5) Britney Spears

6) Naruto (http://en.wikipedia.org/wiki/Naruto)

7) American Idol

8) Kim Kardashian

9) NASCAR

10) RuneScape (http://en.wikipedia.org/wiki/RuneScape)

Athlete of the Decade

Tiger Woods was named Athlete of the Decade by members of The Associated Press in a vote that was more about 10 years of performance than nearly four weeks of shocking headlines.

Woods received 56 of the 142 votes cast by AP member editors since last month. More than half of the ballots were returned after the Nov. 27 car accident outside his Florida home that set off sensational tales of infidelity.

Lance Armstrong, a cancer survivor who won the Tour de France six times this decade, finished second with 33 votes.

He was followed by Roger Federer, who won more Grand Slam singles titles than any other man, with 25 votes.

Record-setting Olympic swimmer Michael Phelps came in fourth with 13 votes, followed by New England quarterback Tom Brady (6) and sprinter Usain Bolt (4).

From: http://sports.espn.go.com/golf/news/story?id=4747530

Congress

Government by the People???

Well maybe, but not average people...

Senator Dianne Feinstein (D-Calif.) - Estimated Net Worth $72 million

Senator Frank R. Lautenberg (D-NJ) - $74 million

Senator Jay Rockefeller (D-WestVa) - $94 million

Representative Vernon Buchanan (R-Fla.) - $142 million

Representative Jared Polis (D-Colo.) - $152 million

Senator John Kerry (D-Mass.) - $208 million

Senator Mark Warner (D-Va.) - $209 million

Senator Herb Kohl (D-Wisc.) - $214 million

Representative Jane Harman (D-Calif.) - $244 million

Representative Darrell Issa (R-Calif.) - $255 million

http://www.cnbc.com/id/33993791/

Happiest States

Andrew Oswald and Stephen Wu recently conducted a survey of U.S. citizens to determine which states were the happiest.

Their results come from a comparison of two data sets of happiness levels in each state, one that relied on participants' self-reported well-being and the other an objective measure that took into account a state's weather, home prices and other factors that are known reasons to frown (or smile).

The happiest states:

1. Louisiana
2. Hawaii
3. Florida
4. Tennessee
5. Arizona
6. Mississippi
7. Montana
8. South Carolina
9. Alabama
10. Maine

They were also surprised at the least happy states, such as New York and Connecticut, which landed at the bottom two spots on the list.

"We were struck by the states that come at the bottom, because a lot of them are on the East Coast, highly prosperous and industrialized," Oswald said. "That's another way of saying they have a lot of congestion, high house prices, bad air quality."

He added, "Many people think these states would be marvelous places to live in. The problem is that if too many individuals think that way, they move into those states, and the resulting congestion and house prices make it a non-fulfilling prophecy."

From: http://news.yahoo.com/s/livescience/20091217/sc_livescience/happieststatesrevealedbynewresearch

Obama

Matt Taibbi is a great writer for Rolling Stone and his recent article on President Obama is a must read:

http://www.rollingstone.com/politics/story/31234647/obamas_big_sellout

Tiger

From Bill Simmons @ ESPN:

With five weeks remaining in the aughts, pre-teens, double zeroes or whatever we end up calling the 2000s, the title for "Biggest Sports Story of the Decade" was up for grabs.

Michael Vick? Tim Donaghy? The Mitchell report? The Artest Melee? Barry Bonds? Pat Tillman? Eagle, Colorado? Roger Clemens? Andre Agassi's admission that he won Wimbledon with a weave?

You could have made a case for any of them.

And then ... Tiger happened.

Game over.

I'm calling it the "Tiger Zoo" instead of "TigerGate," only because we have to break the habit of slapping "gate" after everything. But the Tiger Zoo nailed every gotta-have-it component for a big-time story with legs.

First, it involved one of the most famous living athletes.

Second, it started definitively with a specific incident -- and not just any incident, but something that made us say, "Wait, this seems fishy, I wonder what really happened here ..." and quickly became more complex than we imagined.

Third, it built steam over the next week, crossed into the mainstream and dominated conversations, e-mails and tweets.

Fourth, it transformed our collective perception of a famous person and made us re-evaluate every opinion we had about him.

Fifth, it grew so enormous so quickly that everyone with a forum (radio show, column, blog, whatever) felt obligated to come up with an angle on it.

The whole article, as are all of Bill Simmons' articles, well worth the read.

http://sports.espn.go.com/espn/page2/story?page=simmons/091211

Another great ESPN article on Tiger:

http://sports.espn.go.com/espn/columns/story?columnist=reilly_rick&id=4727383

The CALM Act

Rhode Island Democratic Sen. Sheldon Whitehouse is ready to take on that annoying blast of sound when TV commercials are just too loud and wants to compel the Federal Communications Commission to fix it and require the ads to be at the same decibel level as the programming.

Whitehouse has introduced legislation called the Commercial Advertisement Loudness Mitigation Act of 2009, or CALM.

Democrats say the FCC has received consumer complaints about commercials being louder than television shows since the 1960s. In the 25 quarterly reports on consumer complaints released by the FCC since 2002, 21 have listed as a top complaint the loudness of television commercials.

From: http://firstread.msnbc.msn.com/archive/2009/12/10/2148946.aspx

$4.8 Trillion -- In Interest!!

More than HALF of the $9 trillion in debt that Uncle Sam is expected to build up over the next decade will be interest.

HALF!!

$4.8 trillion!! That's trillion with a "T".

In 2015 alone, the estimated interest due - $533 billion - is equal to a third of the federal income taxes expected to be paid that year, said Charles Konigsberg, chief budget counsel of the Concord Coalition, a deficit watchdog group.

From: http://money.cnn.com/2009/11/19/news/economy/debt_interest/index.htm

One Hit Wonders

Billboard Magazine has released its list for the top one hit wonders of the decade:

#1 was.....

Daniel Powter with "Bad Day"

http://www.youtube.com/watch?v=gH476CxJxfg

Congratulations, kinda.

http://news.yahoo.com/s/ap/20091207/ap_en_mu/us_music_one_hit_wonder

Social Networking to the Extreme

You have to see this to believe it:

http://laughingsquid.com/groom-updates-facebook-twitter-at-the-alter-while-getting-married/

NFL's Top Sellers

Highest grossing NFL Teams in terms of merchandise sales this season:

1. Pittsburgh Steelers
2. Dallas Cowboys
3. Minnesota Vikings
4. New York Giants
5. Chicago Bears
6. New England Patriots
7. Philadelphia Eagles
8. Denver Broncos
9. Indianapolis Colts
10. New Orleans Saints


Best selling NFL jerseys this season:

1. Brett Favre
2. Troy Polamalu
3. Adrian Peterson
4. Tom Brady
5. Peyton Manning
6. Jay Cutler
7. Ben Roethlisberger
8. Eli Manning
9. Tony Romo
10. Mark Sanchez

http://www.cnbc.com/id/34259984

1 in 8

From the New York Times:

With food stamp use at record highs and climbing every month, a program once scorned as a failed welfare scheme now helps feed one in eight Americans and one in four children.

More than 36 million people use inconspicuous plastic cards for staples like milk, bread and cheese, swiping them at counters in blighted cities and in suburbs pocked with foreclosure signs.

Virtually all have incomes near or below the federal poverty line, but their eclectic ranks testify to the range of people struggling with basic needs. They include single mothers and married couples, the newly jobless and the chronically poor, longtime recipients of welfare checks and workers whose reduced hours or slender wages leave pantries bare.

The entire article is long, but well worth the read: http://www.nytimes.com/2009/11/29/us/29foodstamps.html?_r=2&hp

4 Pillars

Thomas Friedman, the NY Times columnist, and author of The World is Flat, recently wrote that:

My own foreign policy thinking since 9/11 has been based on four pillars:

1. The Warren Buffett principle: Everything I’ve ever gotten in life is largely due to the fact that I was born in this country, America, at this time with these opportunities for its citizens. It is the primary obligation of our generation to turn over a similar America to our kids.

2. Many big bad things happen in the world without America, but not a lot of big good things. If we become weak and enfeebled by economic decline and debt, as we slowly are, America may not be able to play its historic stabilizing role in the world. If you didn’t like a world of too-strong-America, you will really not like a world of too-weak-America — where China, Russia and Iran set more of the rules.

3. The context within which people live their lives shapes everything — from their political outlook to their religious one. The reason there are so many frustrated and angry people in the Arab-Muslim world, lashing out first at their own governments and secondarily at us — and volunteering for “martyrdom” — is because of the context within which they live their lives. That was best summarized by the U.N.’s Arab Human Development reports as a context dominated by three deficits: a deficit of freedom, a deficit of education and a deficit of women’s empowerment. The reason India, with the world’s second-largest population of Muslims, has a thriving Muslim minority (albeit with grievances but with no prisoners in Guantánamo Bay) is because of the context of pluralism and democracy it has built at home.

4. One of the main reasons the Arab-Muslim world has been so resistant to internally driven political reform is because vast oil reserves allow its regimes to become permanently ensconced in power, by just capturing the oil tap, and then using the money to fund vast security and intelligence networks that quash any popular movement. Look at Iran.

Hence, post-9/11 I advocated that our politicians find sufficient courage to hike gasoline taxes and seriously commit ourselves to developing alternatives to oil. Economists agree that this would ultimately bring down the global price, and slowly deprive these regimes of the sole funding source that allows them to maintain their authoritarian societies. People do not change when we tell them they should; they change when their context tells them they must.

A League of their Own

Phyllis Patterson is 78 years old, lives at the Beaumont Rehabilitation and Skilled Nursing Center in Northbridge, MA.

She is also an avid fantasy football participant.

In just two months, attendance at televised Sunday afternoon games in the third-floor common room at the Nursing Center has doubled, and about a dozen seniors between the ages of 77 and 93 earn points weekly depending on the performance of their NFL teams.

You can learn more about the fantasy football adventures in Northbridge here:

http://www.boston.com/news/local/massachusetts/articles/2009/11/09/fantasy_football_giving_these_residents_a_kick_sundays/