2011 Prediction review, YIKES
For the past five years I have posted my predictions for the coming year on January 1st of the year and reviewed those predictions in the week after Christmas. The first four years the review process was not so bad, but for 2011, I have been dreading the review. So here we go.
1. Europe will be the top performing developed market
Clearly the SPY was the top performing market so this prediction was wrong.
2. Large cap US will out perform small and mid cap equities.
BULLSEYE! No regrets on this prediction, it was absolutely correct! So you would not have made any money going long the SPY buy shorting MDY and IWM were profitable!
3. US Dollar will have a bad year, down 10 percent.
Well the US dollar spent most of the year down about 10 percent, but the rally in Q4 cut its loss to a little over three percent. I cannot call the prediction wrong, I cannot call it right, nevertheless it was a money maker.
4. Federal Reserve raises inflation expectations making WIP and TIP top performing bond markets.
If the Fed raised inflation expectations TLT would not have been the top performing bond market. US Treasuries with the longest duration did the best which clearly means the premise was wrong. TIP came in third and WIP dead last making this prediction wrong.
5. Consumers continue to payoff debt making retail #1 loser sector
Well XLP and XLY being the second and fourth best performing sectors this prediction was clearly wrong. Even a blind person can see that XLF was the biggest loser!
6. Interest rates rise and bonds produce negative returns. Please refer to the chart in prediction #4 and you will see that this prediction is wrong! Cash and TIP did earn positive returns while WIP produced a negative one.
7. There may have been 10 defaults, Jefferson County Alabama, Detroit taken over by the State and Central Falls Rhode Island were the only ones that rose to national attention. Municipal financial problems did not materialize to the extent I was expecting so I get another W for this prediction.
8. Equity markets rally through Q1, lose steam in spring, tank in the summer and rebound in the fall.
BULLSEYE! With the minor exception of the markets topping in May this prediction was absolutely correct, especially the tanking in the summer!
9. XLE, XLB and IYR will be the top performing sectors.
I was looking for inflation to raise its ugly head making "stuff" more valuable. No inflation, so "stuff" did not perform as expected. Ok, I was wrong.
10. BRIC countries will be top perfoming emerging markets led by China
Not certain that the BRIC countries were the top performing emerging markets, but China did lead the pack. I will call this a push, neither wrong or right.
Bonus Prediction
12-21-2012 end of the world prediction of the Mayan's enters mainstream media driving gold to $2,150.
Well, 12-21-2012 is beginning to enter the mainstream media and Gold did approach $2,000 per ounce but never did manage to achieve $2,150. So much for my bonus prediction.
This was the worst year in the last five years of making predictions with only two Bullseyes, two pushes and the rest were flat out wrong. Hope springs eternal and 2012 is a new year giving me new chances to be correct! Look for my market predictions on January 1, 2012.
1. Europe will be the top performing developed market
Clearly the SPY was the top performing market so this prediction was wrong.
2. Large cap US will out perform small and mid cap equities.
BULLSEYE! No regrets on this prediction, it was absolutely correct! So you would not have made any money going long the SPY buy shorting MDY and IWM were profitable!
3. US Dollar will have a bad year, down 10 percent.
Well the US dollar spent most of the year down about 10 percent, but the rally in Q4 cut its loss to a little over three percent. I cannot call the prediction wrong, I cannot call it right, nevertheless it was a money maker.
4. Federal Reserve raises inflation expectations making WIP and TIP top performing bond markets.
If the Fed raised inflation expectations TLT would not have been the top performing bond market. US Treasuries with the longest duration did the best which clearly means the premise was wrong. TIP came in third and WIP dead last making this prediction wrong.
5. Consumers continue to payoff debt making retail #1 loser sector
Well XLP and XLY being the second and fourth best performing sectors this prediction was clearly wrong. Even a blind person can see that XLF was the biggest loser!
6. Interest rates rise and bonds produce negative returns. Please refer to the chart in prediction #4 and you will see that this prediction is wrong! Cash and TIP did earn positive returns while WIP produced a negative one.
7. There may have been 10 defaults, Jefferson County Alabama, Detroit taken over by the State and Central Falls Rhode Island were the only ones that rose to national attention. Municipal financial problems did not materialize to the extent I was expecting so I get another W for this prediction.
8. Equity markets rally through Q1, lose steam in spring, tank in the summer and rebound in the fall.
BULLSEYE! With the minor exception of the markets topping in May this prediction was absolutely correct, especially the tanking in the summer!
9. XLE, XLB and IYR will be the top performing sectors.
I was looking for inflation to raise its ugly head making "stuff" more valuable. No inflation, so "stuff" did not perform as expected. Ok, I was wrong.
10. BRIC countries will be top perfoming emerging markets led by China
Not certain that the BRIC countries were the top performing emerging markets, but China did lead the pack. I will call this a push, neither wrong or right.
Bonus Prediction
12-21-2012 end of the world prediction of the Mayan's enters mainstream media driving gold to $2,150.
Well, 12-21-2012 is beginning to enter the mainstream media and Gold did approach $2,000 per ounce but never did manage to achieve $2,150. So much for my bonus prediction.
This was the worst year in the last five years of making predictions with only two Bullseyes, two pushes and the rest were flat out wrong. Hope springs eternal and 2012 is a new year giving me new chances to be correct! Look for my market predictions on January 1, 2012.
Posted by Bradley Fluetsch at 12/26/2011 9:05 AM 
Categories: Speculation
Tags: market stock bond invest retire gold 2011 2012 inflation
Categories: Speculation
Tags: market stock bond invest retire gold 2011 2012 inflation
Comments