I usually dread writing the year-end prognostication column, simply because I am not very adept at predicting the future. Each year is full of surprises; to think that I can nail down what will happen with any degree of accuracy is a losing battle. The great Ted Williams hit over .400 once in his career, and I'd consider myself lucky to do the same with this list.
These calls will range from the obvious to the ridiculous to, perhaps, the useless. You can decide which is which.
- Volatility will reign supreme in 2016. It will be a wild ride. The S&P will rise or fall by 1% or more at least two trading days per week, on average. This will not be a repeat of 2008, though, and the S&P 500 will end the year up or down 10%. That's the best I can do.
- The Fed will raise interest rates four times during the year in 25 basis point moves, and we'll end the year at 1.25%. They'd do more, but the economy will still be in slow recovery mode, and Yellen won't want to rock the boat too much.
- Earnings will start to matter for some of the dominant, high-flying momentum stocks. Names such as Amazon.com (AMZN), trading at 123x 2016 consensus estimates, will be re-priced by the market. Great company, just an overpriced stock, says the simpleton value investor. Others that will also have a rough ride include the likes of Facebook (FB), Salesforce.com (CRM), and Netflix (NFLX).
- Restaurant stocks will have a difficult year. Menu prices will rise, earnings will suffer, and valuations will fall. We'll see some consolidation there too, at least one bankruptcy, and perhaps a name or two will go private. The publicly traded restaurant space has grown too crowded with a plethora of IPOs in recent years, and the luster will continue to wear off of some of those names. Chipotle (CMG), however, will recover -- at least as it pertains to its e-coli related issues.
- Precious metals will stage a small recovery during the year, as investors seek solace from market volatility and continuing uncertainty around the world. Silver ends the year at $18, gold at $1375. Apologies to the technicians for this one, I know the charts look terrible.
- Donald Trump will not end up being the republican nominee for President. Still believing it is his for the taking, he ultimately will realize how confining it would be to serve as President of the United States. Who would want that job, anyway? He bows out gracefully, although I'm not sure what that would look like.
- Marco Rubio and John Kasich (VP) defeat Hillary Clinton and Evan Bayh (VP) in November's Presidential election. Many voters, disgusted by the process, or lacking strong conviction for a candidate, stay home.
- The Philadelphia Phillies surprise everyone (even themselves) and clinch an NL wildcard spot. A cobbled-together pitching staff rises to the occasion, and makes Philly proud. Maikel Franco has a career year, the first of many.
The Affordable Care Act
- More cracks appear in Obama's "signature" presidential accomplishment. Rate increases accelerate further heading into 2017, making this year's 11% increase in premium (in my case) seem paltry. The subsidies received by many don't make the huge deductibles palatable, and more will opt to pay the fines associated with not having coverage.
Here's to a healthy and prosperous New Year!