Every year i find myself reading some newspaper or magazine's predictions for the coming year. And every year i sit there shaking my head in disbelief. I just can't believe how naive, bland and tasteless --- not to mention WRONG -- most predictions are. They only see in straight lines.
But that's just not how life, events and history play out. They take twists and turns and unexpected plunges. Totally new players emerge from left field to take center stage... and things we never imagined - HAPPEN.
The Economist, for example, admitted that it got nearly ALL its predictions for 2010 WRONG.
So what do they and many other publications do?
Yep. With a track record of utter failure, they invite us to read their predictions -- Yet AGAIN.
That i just don't get.
So this year, instead of sitting there in June or August and saying to my partner: "I told you such and such would happen", I've decided to go on record. Lay my predictions out and see how accurate I was in 12 months.
So, while some of my predictions will be extrapolations of trends already underway --straight lines-- others will attempt to anticipate the unexpected. As such, there is an inevitable degree of risk in making such predictions. But then that comes with the territory.
And even if they're totally off the mark - they won't be any worse than the others.....
Here goes:
1. Apple WARS: The Empire of Competitors Strike Back
Apple has been in an enviable position for several years with very little real competition. That is about to change. And with some interesting consequences. I predict that the same thing that happened with the personal computer back in the 80s and 90s will happen again. History will repeat itself.
For those of us old enough to remember - Apple single-handedly invented the pc - the original Mac. BUT, then as now - they tried to keep everything locked tight inside the Apple Kingdom. Although their machines were light years ahead of anything else, they were not FLEXIBLE or ADAPTABLE.
Then, as now, Steve Jobs kept iron-fisted control. And of course Apple's products were sold at a premium.
Then came Microsoft. That dorky nerd company with the whiny-sounding boss.
But Billy-boy understood something about human nature and marketing that Jobs in all his technical brilliance was blind too.
People want LOWER prices and more FLEXIBILITY. They don't want somebody telling them their product can only be used in a certain way. Even if it means a less sophisticated, harder to use product.
Billy-boy gave businesses, then the mass markets what they wanted. Not unlike the Video wars between Sony and Matsushita in the 80s. Remember the Betamax from Sony? It was technically better - had a much crisper, better quality picture. BUT
The VHS - which was a vastly inferior product from Mastushita was better. Better because they understood what people would want to USE the video for. To watch movies. Sony's Betamax was only 60 minutes in the beginning. The VHS two hours. Guess which one triumphed?
Matstushita, like Microsoft, made a vastly inferior product, but which answered the needs, what people really wanted. Sony just didn't get what people would use their products for.
Microsoft, similarly got its hands on several disparate programs from other companies and created its first integrated Office product.
Today MANY people are complaining about the Ipad's lack of Flash, locked Iphones and poor reception etc... It is only a matter of time before some one sees the possibilities in Apples products and history repeats.
Expect to see the humbling of Apple begin this year as the competition's products begin hitting the markets. In fact - Samsung already has its own Ipad ready to launch in Korea in March and in summer worldwide...
2. Gold : What Goes UP, Must Come Down, down, down...
Gold has been in a bull market for nearly 10 years. Up 30% just this year -- at over 1400US per ounce. It is so way over-priced, it is in bubble territory. Now would be an excellent time to take profits on any gold one has.
Because I see it falling back initially to the 1150s, then at some point to see it's low for the year in the 700s. And by year-end, it should have recovered back to the 900 range.
3.. Europe: Storm Clouds Continue To Gather and Darken.
We've seen Iceland implode. Then Greece need and get a rescue package. Next Ireland. And now Spain and Portugal are teetering on the brink of default... As a result Europe has begun moving towards the unthinkable: Political Union. Yep - A United States of Europe.
In order to stave off or delay the day of reckoning, the Europeans will push closer together.
Meanwhile, the storm clouds will continue to gather.
The wild card, I suspect, will be two-fold. One Northern and one Southern.
First the Southern. Everyone knows the south of Europe is a great place to take a holiday, but a poor one to try to get anything done. They work when they feel like it.
Or so the stereotype goes.
As such - Italy is the other one to watch that no one seems to be talking about.The list of problems is deep and long. Suffice it to say - it's a secret to no one.
Then there is the question of the Northern surprise - one that could really rock markets and confidence in Europe the world over.
I believe that one of the northern countries - one of the apparent stalwarts - will be found to be WEAKER than expected. Based on its history, France has always been closer in culture and mentality to the colourful and profligate South rather than the bland, goosestepping North. More like Spain or Italy than Germany or Denmark.
And if it happens, that will really cause jitters. There will be talk of the end of the Euro again, and the currency could very well push all the way down to parity.
But the Eurocrats will do anything to maintain the facade of unity and strength because they realise their whole Euro scheme will unravel if they don't. So - in the end - they will do whatever it takes to prop up their precious Euro. Even till their last dime.
4. ECONOMIC TECTONIC SHIFTS
And here's the part no one talking about. It is inevitable. It is coming. It will change the balance of power in the world for good.
What is it?
It is when the world realises that the developed world is not Rich anymore, but POOR. That is has spent all its money on welfare and war. It is when the world wakes up to the fact that the emerging countries, like BRIC [Brazil, Russia, India, China] are awash in cash and getting richer everyday.
And with it --- will be a realignment of power in the world.
It will be very interesting indeed to see the countries of the West stand with their hats out to the peoples they've looked down on for so long....
And I believe this will start with the problems in Europe that are just beginning.
Because in the end --- Not This Year --- but eventually Europe will fall. The Euro will come apart. The union will fail and they will be back to the squabbling, bickering countries they've been since the fall of Rome.
With one big difference. They will no longer be the rich and powerful masters of the earth -- but second or even third rate powers off in a dark corner of the world while the real action plays out elsewhere.
5. Australia: Headed For A Serious Crash---
Australia, the darling Down Under has been flying high of late. Americans are even immigrating.
http://online.wsj.com/article/SB10001424052748704118504576034130441492962.html
To me that article is like seeing the CEO of a company on Time Magazine. Time to SELL.
Not to mention the currency is past parity. Housing prices are sky-high. Both in Bubble territory...
China is raising interest rates which is likely to slow their demand for commodities.
Remember the old saying - Updated?: China sneezes, Australia catches a cold.
My advice: SELL, Sell, sell.... In 6 months, you'll be glad you did.
6. The U.S.: Better weather ahead.
The US definitely has its problems. But right now, it is a case of Least Ugly Wins. With the whole world having problems, you don't have to be the fastest or most beautiful to win the race, you just have to be a little less slow or a little less ugly than everyone else.
I believe as the year progresses, more and more people will realise that for all its warts and pimples, the US economy and currency are still the best of all.
I expect to see the the employment picture get better by inches. Interest rates will begin rising before the end of the year and there will likely be a major re-evaluation of the US dollar as it begins systematically rising --on a long term basis-- against every major currency.
That's all for now. I may add to this post if other things occur to me....
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