I wish everyone on this forum a very happy new year.My two cents worth of predictions for 2010:
Q1-Q2 2010:
US will see recession and a stock market collapse.
China will see RE and stock market collapse.
Indias stock market will top out by Feb 2010 and will start falling after budget and keep falling throughout rest of 2010. RE prices in India will stop rising and there will be few sales after budget. New launched projects will stall. Prices will stay steady or dip 5-10% (in affordable apts) or 10-20% in luxury apts.
Gold will rise 20-40% in dollars (1400 per ounce)
Q3-Q4 2010: We will see Shanghai 2000, Dow 8000, Sen 12000.
Commodity prices will collapse. Metal stocks will do badly (exit by Q2).
Gold might slowly fall, but I am not sure - might keep rising - unpredictable.
RE companies will face fresh liquidity problems as interest rates will rise. There will be no more buying in RE.
End 2009 marks the end of lift in RE sales and prices, reflecting pent up demand and 6th pay commission arrear related sales.Fresh launched projects of Dec 2009 will see no sales and will take a long time to build too.
The phony recovery will be over in 2010 and the return of bear markets and recession seems unstoppable.
I think Dow will fall for the next 20 years. I expect it to fall 20% in the next 6 months, rise and then then keep falling with lower tops and bottoms for maybe 3 years. It will go to sleep in a dungeon after that.In real terms, Dow will fall more. Because of inflation, which will keep the dollar price for shares at the same level even as poor economy will lower share value, nominal Dow will fall less.
There is a possibility that US might go into a deflationary spiral. But I am not at all sure, gut tells me stagflation.
In US RE, I am sure of 20 years deflation though.
Short term interest rates will be kept as low as possible by the fed. Its a delicate balance. US fed action will be ineffective, but easing by ECB, China, Brazil/Russia (bothered by falling commodity prices) will prevent global deflation.Stagflation is my bet.
India will see higher interest rates and high inflation (no deflation in India, I am 100% sure). We are the only country without overcapacity in anything (RE included).USA has many million homes more than number of households (1.8 million or 18 million empty houses from what I remember. Anyone have exact data?).
China has no slums - it also has more homes than households, although many are two room hovels (better than juggi). These homes are all that the Chinese can afford though - they cant afford to live in the palatial flats they have built. Banks which have financed Chinese RE will go belly up. Most Chinese banks are now Zombies, people just havent seen the dead eyes of the zombie yet, that is all.
Despite low fed short term rate, bond yields will go up. Idiotic 401 K investors who sold stocks after the crash and went into bond funds will lose half of their capital values, as yields will double. Americans have been total idiots this decade. They have fled to the safety of treasuries through bond funds - a good trade when fed was lowering, a really bad investment to hold as rates rise, no safety there at all! Total total idiots. I expect them to watch their 401k fall further as bonds crash, then exit bond funds after they have taken their fall, shift to equity which will shore up values for a while in 2010 and early 2011 and then stare at further erosion as their shares in broken companies yield nothing.Americans are so badly screwed, so solidly screwed. Their capital (of 50 years of work) is now burnt to ashes.
The baby boomers have crapped on their dinner plate.Equally doomed are Indian IT and other outsourcing ventures. Stay away from their stocks.
I base all predictions on gut feeling, on data absorbed here and there on the internet. Nothing more. I am not an analyst, I am a consumer of analysis. So Wiseman, 8000 is a guesstimate. Could be 6400 too. But I prefer 6400 for 2012, 4000 for 2015 for the Dow.There can be no more bailouts. Not possible, USA is bust. The more it prints, the more US pensioners will get screwed and blame Obama for it. No way Obama will print more money, not if he wants to win the next election.
In any case, Obama will lose the next election. He is going the way of Jimmy Carter.
I agree, my predictions are based on bits and pieces gathered here and there in internet and dont mean anything. Except that I personally believe them and put my money where my mouth is.I post them here because I get your counterpoint, that helps me refine my viewpoint and avoid costly or stupid mistakes.
Dow will fall next 20 years. Let me give 5 reasons.
1. Populations dynamics. Just like the Japanese baby boom aged, American baby boom is also aging. The most productive members of USA are the whites and their population is in decline. US population is increasing because of immigration of less productive MExican population. Terminal decline.
2. Currency devaluation. American companies selling in America will do poorly. American exporters and multinationals will do well.Yes, Dow may change its composition to multinationals and be at 20,000 also. But existing Dow will be zilch. Nobody can predict.
3. Terminal decline of RE. Currently houses outnumber population. With decining population, they will remain unfilled or be filled with immigrants who will pay less/pay in depreciated currency
4. Decline in commercial RE for next 5-7 years. Depreciation of current built property will erode values further.
5. What happened in Japan is echoing in USA. Japan had 20 years of recession. They had 120 million high quality workers. USA also has 150 million high quality workers and another 150 million poorer quality workers. Mean wages will fall. I can see no reason why things wont repeat in USA and have 20 years of recession. They will go the same way. Stagflation will wipe out the savings of American old people and they will be dependent on their younger workers to be alive/healthy. Youngsters will have to support the old for 20-40 years, or old people will have to work till 80 or their health fails.
That is not the prognosis for healthy wealthy or wise!!!!
401K of most Americans is weighted currently towards bond funds. This is after switching out of stock /stock fund in 2008 after markets fell, after 25% loss of capital. Now if they remain in bond funds, they will lose another 25% of capital.Rest of capital will depreciate anyway due to inflation. Average American retirement fund of around 50,000 dollars is grossly inadequate. They need at least 1 million per person. That is 300 trillion for their total population.
Current world wealth is around 450 trillion including all assets. It includes 70 trillion of assets whose value is not clear and can be anything. Total US wealth is around 150 trillion dollars, half what they require.And their capital assets are depreciating faster than replacement. Of course the Americans are screwed.
As I said, I am not an analyst. I consume other's analysis. Much of what I believe is already posted in this site in various places. Click on my name and read previous posts to gather what I believe in. I cannot reproduce it all over againTry reading a blog called Of two Minds. Much of what I have been reading is summarised on this site (though I dont believe everything there, but much data is encapsulated for easy reference).
]http://www.oftwominds.com/blog.html[/url]
As posted on Real Estate Discussion forum
