2016 Predictions

It’s that time of the year again, my predictions for 2016. First, after eight years, the fed did what everyone thought was impossible: they finally raised interest rates, and the market surged. The pundits predicted that the hike would be bearish for equities, but obviously that was not the case as the rate hike was already priced in, and a quarter point isn’t a big deal. The media is almost always wrong. Just remember that.

Predictions:

GOP nominee? Don’t know. It’s either going to be Trump, Carson, or Rubio. Not much of a prediction, I know, but political predictions tend to be harder than economics and finance ones.

Democratic nominee: Hillary, pretty obvious.

2016 US presidential election winner? Tossup. Like prior elections, it will come down to these dozen coveted ‘swing states’. Some sources say Trump can win the swing states; others say he will have difficulty. Hard to know.

Russia and Turkey relations stable. No major geopolitical events, besides the ongoing mess in Iraq, Syria, and Afghanistan.

There will be another major spree shooting in the US; dems push for gun control predictably goes nowhere.

Continued deterioration of SJW narrative (Measuring this is an inexact science. I will go by Imgur posts and Reddit comments to take the ‘pulse’ of the SJW narrative.)

Oil prices rangebound between $30-45/barrel.

US GDP growth, job growth, profits & earnings, consumer spending, employment, etc remains steady. US Economy keeps chugging along without any major problems. Same slow growth and tame inflation that we’ve seen since 2009.

Europe and other foreign markets continue to lag US equities.

Much of Western Europe remains in a borderline recession. Foreign economies remain weak relative to America.

US dollar remains strong and inflation low; no hyperinflation or dollar collapse, sorry zeorhedge.

China bull market resumes.

The 2009 bull market, the second biggest of all time, continues for its 7th consecutive year; posts modest gains for 2016.

My investing strategy, up 27% for 2015, continues to outperform in 2016.

Home prices rise, with Bay Area prices up >5% YOY for 2016.

Valuations for major web 2.0 companies (Snapchat, Uber, Air BNB, etc) keep rising, no ‘bubble’ bursting, sorry libs.

Predictions a housing market crash, web 2.0 crash, or stock market crash will continue to be wrong.

Microsoft stock continues to rally. Same for Facebook, Google, and Amazon stock. Large cap tech and consumer discretionary continue to outperform other sectors.

Treasuries rise despite rising interest rates.

Overall, 2016 will play out much like 2015, which was also similar to 2014. Newton’s first law is applicable to forecasting: a trend will prevail unless an external force acts upon it. In the absence of a catalyst, odds are the trend will continue.

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