Looking back at 2010 and my predictions

These were my predictions for 2010 (comments in bold):

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.
Wrong

China will see RE and stock market collapse.
Wrong

Indias stock market will top out by Feb 2010 and will start falling after budget and keep falling throughout rest of 2010.
Wrong

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.
Partly correct, partly wrong. 2009 was the best time for RE. Although prices did not fall, they rose only a little in 2010, except in Gurgaon where they rose a lot.

Gold will rise 20-40% in dollars (1400 per ounce)
Bang on target!!! But I did not anticipate QE-2, so my reasons were wrong for this gold price rise

Q3-Q4 2010: We will see Shanghai 2000, Dow 8000, Sen 12000.
Wrong

Commodity prices will collapse. Metal stocks will do badly (exit by Q2).
Wrong

Gold might slowly fall, but I am not sure - might keep rising - unpredictable.
Mostly right

RE companies will face fresh liquidity problems as interest rates will rise.
Correct

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.
Wrong

The phony recovery will be over in 2010 and the return of bear markets and recession seems unstoppable
Wrong

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.

Remains to be seen

India will see higher interest rates and high inflation (no deflation in India, I am 100% sure).
Correct

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.
Remains to be seen

Despite low fed short term rate, bond yields will go up.
Partly correct - after QE2, bonds rose to 2.5%yield, then crashed to 3.5% yield or so currently

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.
Many made good money as yields fell

Americans have been total idiots this decade.
Maybe not

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.
Americans are a lot less stupid than what the world gives credence to them

Their capital (of 50 years of work) is now burnt to ashes. The baby boomers have crapped on their dinner plate.
Maybe not

Equally doomed are Indian IT and other outsourcing ventures. Stay away from their stocks.
Wrong

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 analysisSo Wiseman, 8000 is a guesstimate. Could be 6400 too. But I prefer 6400 for 2012, 4000 for 2015 for the Dow.
How wrong!!!!!

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.
And yet, he printed in QE2 and so far the economy has responded to its medicine.

In any case, Obama will lose the next election. He is going the way of Jimmy Carter.
Let us see.

Self analysis : MAN, was I wrong!!!!!!I got almost everything wrong. USA managed to survive, Indian stocks went up further rather than down.Only two things I managed to get right. One - that gold would go up, maybe to 1400dollars. That came true but for the wrong reasons!!! It went up because of QE2 and now the expectation of QE3. It did not rise because of the reasons I gave a year ago.Two- My prediction that India would have inflation was actually not a prediction, but a statement of the status quo maintaining - since we already had inflation in 2010 beginning. SO I dont claim victory for this either. This is the reason why all mutual funds and their managers behave the same way - because the average status quo prediction is likely to be right. Like predicting good monsoon means you will be right 6/7 times, just because those are the long term odds.

I thought US treasuries would crash. They did - but after rising to a yield of 2.5% - which I did not predict.

Basically, I never thought US fed would do QE-2. It caught me by surprise. Everything else - gold, bonds, Indian stocks, Indian RE - is consequent upon that.

Most middle of the road predictions turn out right. Most extreme predictions turn out wrong. However, I still maintain my ADVICE part (in later posts on this thread and elsewhere). Which are

1. One should diversify wealth in RE in addition to stock bonds and gold.
2. For own use, dont time.
3. Buy only what you afford and dont leverage - either avoid completely or at worst, dont leverage for more than 50% of the flat cost and 25% of your take home pay.

I myself invest on these principles.

My FEAR - that was what my prediction was.

I used that prediction in only one way though - I booked an under construction project than one where there was no construction at all, or a plot. I might have made better profits if I had taken a risky bet in Gurgaon, or bought a plot, but I decided to forgo that risky bet and go in for something very very safe. My returns were correspondingly smaller.

But better safe than sorry. I have no regrets. One does not take unnecessary risks with big money.

Similarly, in March 2009, I judged the stock market to be too risky. I thought real estate was the better bet and went with it. I again have no regrets that I missed the opportunity of a lifetime.It was too risky - and a risky bet is never worth it.

And my current and only take home from this year is this:

Predictions can be wrong. But decision making has the purpose of taking the best possible decision given the circumstances.So although all my predictions were wrong, I still stand by all my decisions.Let us see what time does to my decisions - whether they stand the test of time or fall by the wayside like my predictions.