Investment Themes and Predictions 2010

Next Years Predictions/Investment Themes
1. Very high probability of a double-dip recession in the US (lead by housing’s "false dawn") and thus making 2010 global growth very limited
2. China will not be able to pull the global economy out of the rut on its own.
3. A major US bank will be nationalized (my guess = Citibank)
4. Margin Squeezes will plague companies in times of growth and potential recovery…(Stealth Stagflation)
5. The fed fund rate will not increase in 2010 as tons of debt comes due
6. More news regarding sovereign defaults will surface
7. Treasury yields will move up as "risk premium" is priced into US debt 
8. A major unwind of the carry trade and a subsequent major currency collapse (my guess = UK or Japan)
9. Alt. Energy will begin to emerge as the next cause of the secular bull market.  The next secular bull will not take place in 2010.
10. We will have a Emigration in the US.  When was the last time that happened?

Overall a pretty rocky 2010.  
S&P Target Range (throw of the dart lands at….. 700-800)  

Everyone is entitled to their “guesses” because in the end no one really knows what the future will bring. I might sound like a complete idiot 1 year from now, but my main thesis is that we have not fixed the underlying problems that led us to the first financial crisis IMHO (in fact we made them worse now that banks are fewer and bigger), so I can expect that we will have more scary moments as mountains and mountains of debt continue to come due courtesy of our profligate spending as consumers and investors for the last decade. Once I see that our debt problem is being effectivity battled, then I will switch to the other side.

Regarding the image above, for the most part the S&P has mean reverted (& was it painful). Longer term, history points to us making a trip to the negative side.

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