10 Predictions For the Rest of the Year

Most of the investment models I use are objective and are not based on my “opinion” where the market is going. But I do invest a small portion of my assets in a totally discretionary manner and enjoy periodically writing down forecasts for the market and economy. Here are ten predictions for the remainder of the year:

1)    Residential real estate has pretty much bottomed, but we will likely see an L-shaped recovery in prices which will stay low for quite awhile. Commercial real estate will have another down leg as mortgages need to be rolled over.

2)    Emerging market equities will regain market leadership and outperform US equities.

3)    Asian consumers will increasingly demand US and European branded/luxury items which will benefit companies that make these items. They will decrease purchases of their own lower quality stuff which will be shipped to the US to discount chains like the dollar stores and Walmart. US consumer demand for luxury items will continue to stay weak. High end retailers will increase their operations in Asia and decrease operations in the US.

4)    Manufacturing of some low cost goods will move away from China toward lower cost producers like Vietnam. China will need to focus more on producing higher quality goods.

5)    Unemployment may decrease slightly but will remain high (over 9%) using the current methodology. The reduction in demand for high end services within the US will restrain job growth. But it is possible the government may try to change the methodology to “improve the numbers” and reclassify the long term unemployed into a different category (e.g. welfare or retired).

6)    Large global technology companies (Microsoft, Apple, Cisco) will outperform smaller niche technology firms.

7)    The entertainment industry will benefit from Asian demand for 3D technology. We may see the first mergers between firms in Hollywood and Bollywood.

8)    The US dollar strength will reverse. International equities will outperform domestic.

9)    US Treasury returns will be negative.

10) The travel industry will benefit from the weak dollar as Asian tourists increase visits to the US. This will also benefit the Disney theme parks.


One response to “10 Predictions For the Rest of the Year

  1. Pingback: Tweets that mention 10 Predictions For the Rest of the Year « Quant Investor’s Blog -- Topsy.com

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s