The end of the year is always an opportunity to take stock of what we achieved over the last 12 months and to make plans for the next year.
So first, a report card of sorts.
Since starting this publication in September, I’ve made a lot of predictions about markets, sectors, individual stocks… I don’t get everything right, but I do my level best to make calls that are forward-looking, actionable, and accurate. (And I promise to continue to do my level best not to join the parade of idiots taking over this country, its government, its central bank, its mainstream media and its educational institutions.) Today I want to take some time to review these predictions before we chart the course for the New Year.
Then get ready, because this week I’m releasing my full 2016 Forecast for you:
- My 2016 year-end target for the S&P 500 – it’s much different than you’re seeing from Wall Street’s so-called “top strategists.”
- My expected trading range for the euro and the yen.
- Where the 10-year Treasury yield will go.
- The direction of U.S. GDP.
- 10 stocks and ETFs that will go up (including several that are undervalued).
- I have included a formal list of short recommendations as well; I couldn’t help myself. There are too many stocks trading at unsustainable valuations. You’ll see my top 10 shorts and my strategic recommendation for how to play them.
- And even who I expect to win the U.S. presidential election.
First, here’s how my 2015 predictions panned out.
Prediction #1: S&P 500 will drop by 10% by the end of 2015 to 1875-1900.
Date: Dec. 23, 2014
The very first prediction I shared with you was my January prediction for the year, first published in The Credit Strategist newsletter in Dec. 2014: a 10% drop in 2015.
At the time I wrote it, I was unaware of any major strategist making a similar stock forecast. Strategists were almost unanimous in predicting further gains for the market. Barron’s survey of top strategists produced a range of gains ranging from 5% to 17% with not a single strategist calling for a decline.
Of course, this happened in August. The S&P fell to 1867.
In my Super Crash Report update on Sept. 8, 2015, I said “We are likely see more volatility with a downward bias until there is more clarity on the Fed’s intentions regarding interest rates.” While the market recovered from its August low, it has been weak in December. Keep an eye out for my 2016 forecast.
Prediction #2: The U.S. dollar will get stronger.
Date: Sept. 10, 2015
The dollar index DXY was at 96.27 at the time, and I said it was likely to push through its next key resistance level of 98, which would rock the markets – putting pressure on oil and other commodities, U.S. corporate profits, and emerging markets.
DXY pushed above 98 in early November and has remained around there.
Prediction #3: Oil is going to fall by 50%… again.
Date: Sept. 28, 2015
By this time, the energy market was crashing, and oil had just dropped below $45/barrel for the first time in months. But I knew it wasn’t over and predicted that it had another 50% to fall because of massive debt in the energy industry and the strength of the U.S. dollar.
I told you, “Believe me, there is going to be much more blood in the water.”
Three months later, WTI oil just made new decade lows around $34/barrel – not a 50% drop from there but almost 25%.
I still believe the price of oil (WTI) is likely to dip into the $20s before the current cycle ends.
Prediction #4: Glencore could set off an AIG-style meltdown in commodities.
Date: Sept. 29, 2015
I was one of the first commentators to draw attention to the collapse of the world’s biggest commodity trader, Glencore (GLEN.L). I predicted we could see a default and bankruptcy – throwing the commodity sector into a tailspin – but that hasn’t developed yet. Instead, GLEN.L managed a slight rebound, one that it is maintaining, though the stock is still trading 71% off its 52-week high. In order to stay afloat, GLEN is selling assets, closing mines and cutting debt. We will see whether it can shrink itself to survival.
I also said at the time that two stocks that would suffer were BHP Billiton Ltd. (BHP) and Rio Tinto plc (RIO). In the three months since, BHP is down 16% (as I write this). Rio is down 11%.
Prediction #5: VRX is going down to $100/share.
Date: Oct. 15, 2015, and Oct. 20, 2015
This might have been my best call of the year…
In “This Stock Is Everything That’s Wrong with the Markets,” I exposed Valeant for the bad investment it is – with a risky and predatory business model, massive debt load, and catching heat from politicians. It was trading at $168. Just five days later, it lost 31% in one morning and was at $118.
That’s when I told you “I suspect the sell-off has much further to run. This stock could fall to $100/share.” I also gave a specific put recommendation to play it. VRX bottomed at $70/share in November before recovering a bit. It’s now trading just above $100.
The latest news is that CEO J. Michael Pearson took a medical leave of absence after coming down with a severe case of pneumonia over the holidays. We wish Mr. Pearson a swift recovery but we would not be surprised if he never returned to work after all that has happened over the last few months.
By the way, I heard from many of you that you made serious money on this prediction. That’s gratifying; thank you for sharing your successes.
Prediction #6: The “Christmas Rally” is already over.
Date: Nov. 5, 2015
At that time, the S&P 500 had rallied a remarkable 13% in five weeks, recapturing all of its summer losses. I pointed out most of the gain was caused by just four large-cap tech giants (MSFT, AMZN, AAPL, FB). I said “Traders should be grateful for the early Christmas rally and take their gains and go home.”
The S&P was at 2075; now it’s at around 2050 and showing real weakness as the year ends.
Prediction #7: Gold will be trading at thousands of dollars an ounce years from now.
Date: Nov. 11, 2015
Too early to tell. My line remains “Buy gold and save yourself.”
Prediction #8: You should sit out Macy’s; it’s not going to do well, but it’s not a good short candidate either.
Date: Nov. 17, 2015
When I wrote to you about Macy’s (M), I explained that Macy’s was not going to do well in the context of many retail “death blows.” But nor was it a good short candidate, having falling 40% in four months, and with a nice dividend to buoy it. Since then the stock has fallen about 8%.
I would like to thank everyone who reads Sure Money for their interest and support. I wish all of you from the bottom of my heart good fortune and good health and happiness in the year ahead. A number of exciting projects are in the works for 2016, and I’m glad you’re with me.