2015 RECAP

10 Surprises for 2015 (RECAP What I said in 2014 eoy)

Surprise No 1: Low oil is here to stay

 I think low oil is here to stay and its become the new norm for oil to trade between $30-$60 dollars a barrel for the next 2 years. Why? Too much supply and most shale producers are not planning to cut production. The only way they cut is if their companies go bankrupt which is a possibility. Most investors are expecting a quick rebound. I don't think so for some time. I think it would be difficult for oil to cross $80 a barrel for the next 5 years. Low oil is the new norm.

UPDATE: CORRECT, The Current price of oil is $36.99. I totally nailed this call. The drillers are about to go bankrupt. Oil funds having investors ask for their money back. Glencore almost bankrupt and oil Hard commodity producers getting killed.

Surprise No 2: Airlines outperform

I think if the low oil stays low for a long period of time the airline stocks will all go parabolic. This is because the industry has suffered for 30 years with high oil CAP EX. The industry has cleaned up its CAP EX with technology and with better margins on ticket sales it will help rally this sector to parabolic levels. Especially when they rip you off with the extra bag costs.
 

UPDATE: WRONG, The Current price of DJUSAR is $247.  Low oil did not translate into higher margins for airlines. The stocks may have been too richly priced in 2014 thus having little room to move in 2015. Another idea is some of the airlines rallied but you had to be selective.

Surprise No 3: Cyber wars go big

 I think there is a good chance the US and another country such as China or North Korea get entangled into a cyber war due to hacking. Either a company vs a country or a country vs a company will ensue more cyber violence. Some big network could be affected and we could loose a part of the internet or one of the major exchanges in the US go down.

UPDATE: CORRECT, PANW went from 125 to 195. This was a great year for cyber security firms. They even made a show about security called "Mr Robot. This has been a crazy year for hackers. Security is a must for many major corporations. Big firms are now moving to the cloud to increase security.

Surprise No 4: Apple hits 1 Trillion market cap

 As mobile computing continue to expand across the world and more people jump on the information super highway it has helped so many social related companies. I honestly think Apple computer is the pinnacle player in this realm. They have high margins and high volume. Apple continues to innovate and create new products for the next generation of the technology evolution. Apple will possibly the first US company to hit a 1 trillion market cap. To gain another 300 billion in market value requires another 2-3 years of great innovation and wonderfull sales tactics which Apple has always been able to deliver.

UPDATE: 50/50 Kinda Right, The Current price of AAPL is $107.  The new Iphones, Smart watch and all the other things Apple did this year did not help the bottom line for equity expansion. Sadly, AAPL did not reward investors in 2015.  The stock did peak out at $130 but ran into trouble when the I-watch did not sell as expected. Maybe next year.

Surprise No 5: Healthcare continues outperform

 Companies like Wallgreens and CVS are going to continue higher. Health related sector has gained massively from Obama care.  All sorts of health related companies now are gaining value from the regulation in healthcare. The government is splitting the costs of drugs.

UPDATE: CORRECT, The Current price of  CVS is $107.  The broad sector did go higher and many hedge funds that were health care related made allot of money. The industry did not get a big boost in 2015 because most of the low hanging fruit was found in 2014. You had to be selective with the stocks you bought.

Surprise No 6: Autos outperform

 If oil continues to stay low this may create an opportunity for car makers and dealers to do better then expected and the lack for E/V cars fall as people flock traditional gas vehicles.  Auto makers and dealers will continue higher into 2015 as the big three sell more cars ever than before in recent history. The better economy helps all auto dealers wit low interst rates on auto loans.

UPDATE: WRONG, The Current price of  F is $14 and GM is $34  Autos had a flat year which shows that the world economy may be slowing. The US Economy peaked out in first half of 2015 and allot of industries stalled such as Autos.

Surprise No 7:  Electric cars demand fall bad for TSLA

 I think TSLA will not do so well in 2015 because lack of demand for electric will be delayed until oil stabilizes. This is bearish for Tesla motors and the stock may head down to the $120 level during 2015. Tesla will rebound eventually as oil prices continue higher in the back half of 2015.

UPDATE: WRONG, The Current price of  TSLA is $243. TSLA did rally to $280 in first half of 2015 but then ran out of juice as with the rest of the Auto Industry and the broad US economy. I expected TSLA to selloff because of low oil but that did not happen. Investors seem to keep the demand for TSLA as its seen as a cult stock.





Surprise No 8: Bond Yields Rise

The long bubble in the bond market will finally come to an end as the payout of bonds to stocks has finally begin to shift the reversal. The moves by the fed will switch the trend from equities to bonds in the back half of 2015.

UPDATE: CORRECT, The Current price of  the 30Y note is $3.04. Bonds did not rise much because the FOMC delayed increasing rates up until the last month of the year. Yellen skipped multiple rate increases to focus on the strength of the recovery.

Surprise No 9: China housing crashes 

I think the long awaited crash in the housing bubble of china begins to break down asset prices. China will have to devalue its currency to deal with the major housing collapse. They have been building one stop without the need for organic growth. Sooner or later this market will collapse. This could also spill over into all markets and become a catalyst for a selloff in all asset prices in the world

UPDATE: WRONG, China stock market did crash but the Real Estate market held up. I totally missed this one. Maybe next year.

Surprise No 10: Inflation comes back

 I think the low oil prices coupled with easy money printing as well as a good economy with jobs will finally create asset inflation for the common folks of the economy. This will jack up asset prices in consumer inflation. This is the ugly form of inflation that hurts consumers. This will spur the fed to raise interest rates quicker than expected.

UPDATE: WRONG, Inflation did not go up because the Federal Reserve is keeping the reserve ratio at banks high. They are manipulating the economy to force inflation to near zero. Adding with the melt down in oil and other commodities we have deflation going on in some industries.

2014 RECAP

10 Surprises of 2014 RECAP (What I said in 2013:):

Surprise No 1: Apple’s next product

Sometime in 2014, AAPL may begin to get its act together. It is still a great company but shrinking margins and higher competition is really hurting AAPL's bottom line. The company needs to make a game changer product, possible a competitor to GOOGLE's Glass. The company lost its CEO so it needs to revamp the cult following by doing some type of spectacle. 

The company may launch the I-Watch, and I-Glasses. The company may not be able to out compete Samsung who has done an amazing job at its products.

AAPL is still in big trouble as far as I see it for now.  The prices may stay in this range all year next year.

Result:  I was 100% correct. The company has risen higher and near an all time high. Even thou this split the stock.

 



 Surprise No 2: TSLA continues higher

Tesla has done well this year but the company is trading too high and growing too fast. The stock took a beating late this year after 3 cars caught on fire. But the stock is still up allot of points. I still think the company will do well in 2014, they will sell more cars and this will continue the stock price higher. It may get a nice flush out before the next big wave up sometime in 2014. The electric car is here to stay and the industry is still very young. Upside targets 300+

This is also good for F, GM as well who are working hard to deploy electric cars to the retail public.

Result:  I was 100% correct. 

  Surprise No 3: GOOGLE Glass

The google glass should be launched this year and it will be a game changer. The tablets will be replaced by the GOOGLE Glass. It is the next evolutionary shift in mobile computing. The project will be a major success for google and I think it may push GOOGLE even higher. The company is doing well, and is in the position to do well for many years to come. The company has become a conglomerate of technologies. 

This is a very good company. The company should approach 1500 now.

The only risk I see to GOOGLE is the advertisement revenue begin to dwindle again and the earnings projections change.

Result:  I was wrong. Earnings contracted
 

 

 
Surprise No 4: 3D Printing industry grows, stocks should crash

The industry will grow in 2014. I still am not sure all these stocks will follow the industry growth. I think many of these companies are bubbles that are trading to insane P/Es. These companies have no earnings and is built on hype. This generally never ends good for stocks like these. I still think the industry will grow and a standard must be developed for retail 3-D printers. Currently no standards exist and its the wild wild west in 3D printing technologies.

Its great technology, I am a bull on the industry but a bear on the stocks

Result:  I was wrong the industry collapsed in 2014

 

Surprise No 5: Exon Mobile should continue higher

Now I said that oil may be going into a bear market last year but what I am seeing is the local US production on OIL has made us totally independent to oil already. We have so much new oil coming out the ground the story for oil will last allot longer than the alternatives.

Oil will be around for another 30 years and this is why I think XOM will be the leader. XOM is a great company originally owned by Mr. Rockefeller. I was on the last conference call and learned that XOM has over 20+ wells in development all over the world. If you add up all the revenue found in the new wells you can say the company is on a good path to grow. 

With all the local wells found in the USA in places such as the Baken and other wells, you can safely say that XOM will do well in the next 10+ years if they double there production. This will also double the company in size and is great for value investors. 

XOM has always been a leader for premium gasoline and I suspect that it will continue being a leader next 30 years. Maybe this is why buffet bought 5 Billion worth near high of year ($86.42 - $95.2) average $90.22

When oil is the core to the modern world, it will always be in demand for years to come. So picking the best horse for the next 30 years out is a safe bet that the bet is correct. Oil is used in heating, cars, plastics, toys, housing products. It is essential to life. XOM is also producing Natural gas products as well.

Result:  I was wrong the industry collapsed in 2014

Surprise No 6: Natural gas grows in demand

Recently, America has produced allot of natural gas and we have so much supply it has killed natural gas prices. Storing the natural gas was a problem for years but now we can transport the product to other countries and sell it. 

This means that if we can get cars, more homes and other uses for the energy it will also help our reliance on oil. 2014 may be the first year where the demand starts to eat into the massive supply we have in the USA that will help cause prices to rise for the commodity.

Result:  I was wrong the industry collapsed in 2014

Surprise No 7: Housing picks up

 

In 2014, the housing market will pick up and prices will begin to rise. Also production for contractors, building materials and all other related jobs may increase as well. This bodes well for unemployment because many jobs in the economy are construction related.

Soft areas may begin price appreciation, and places like New York will go on fire. The only risk to housing recovery is loan issues with banks, higher credit standards and stability of the economy.

Result:  I was right

Surprise No 8: Social Networking the Bubble

 

I continue to be a bear on social networking. I think the whole industry is a bubble that is waiting to be popped. The hype of sending messages and posting things is heavily leveraged for advertisers. I still think FB and TWTR are bubbles. I was dead wrong on GOOG for years thinking it was a bubble. It may still be, but they have moved away from just advertisements to make money. 

This social networking fad will fade as teens grow sick of these silly tools. Online advertisement may be growing but I see it as a bubble continue to expand until one day all these online ad related companies get destroyed by a massive re-evaluation. 

Online impressions has a flaw. The fundamental flaw will creep up and hurt many people one day. Mark my words!

Result:  I was wrong the stocks like Facebook and Linked-in did well.

Surprise No 9: Market Enthusiasm

 

Emotion will trump logic as investors trade momentary comfort for long-term security. I think the markets will continue to trade form a short term perspective. Things will move faster and faster due to Weekly Options. We will also have some nice moves in 2014 on both sides. 

I think eventually allot of people will get hurt on any major reversals in the economy because many of the money on the sidelines will eventually be too late buying at these current levels. The people buying on the highs will be the ones who get crushed first.
 

Result:  I was wrong the market just trended higher with few corrections
Surprise No 10: Bitcoin Grows stronger

 

I think even thou FIAT currencies are blowing up due to Fed printing all over the world the need for an alternative FOREX currency may take hold. This new currency is very similar to GOLD, or a minor pair currency. I think the need for a global currency that is not controlled by governments may be the biggest threat to all industrialized nations. The general population are tired of massive government debt, runaway spending and would support something that has better stability. 

Now bitcoin is a baby currency and must first be more popular in circulation before it actually become something that has legs.  Currently its all speculation and that is very dangerous.  If more exchanges are built and you can actually trade it on the FOREX market it may turn into something as a world alternative.   We need more products and services using the coins, allot more liquidity and less volitility for Bitcoin to grow. I think in 2014 it will continue to grow but will it survive the long hall, I have no clue!

Result:  I was wrong the industry collapsed in 2014

10 Surprises for 2015

10 Surprises for 2015

Surprise No 1: Low oil is here to stay

 I think low oil is here to stay and its become the new norm for oil to trade between $30-$60 dollars a barrel for the next 2 years. Why? Too much supply and most shale producers are not planning to cut production. The only way they cut is if their companies go bankrupt which is a possibility. Most investors are expecting a quick rebound. I don't think so for some time. I think it would be difficult for oil to cross $80 a barrel for the next 5 years. Low oil is the new norm.

Surprise No 2: Airlines outperform

I think if the low oil stays low for a long period of time the airline stocks will all go parabolic. This is because the industry has suffered for 30 years with high oil CAP EX. The industry has cleaned up its CAP EX with technology and with better margins on ticket sales it will help rally this sector to parabolic levels. Especially when they rip you off with the extra bag costs.
 

Surprise No 3: Cyber wars go big

 I think there is a good chance the US and another country such as China or North Korea get entangled into a cyber war due to hacking. Either a company vs a country or a country vs a company will ensue more cyber violence. Some big network could be affected and we could loose a part of the internet or one of the major exchanges in the US go down.

Surprise No 4: Apple hits 1 Trillion market cap

 As mobile computing continue to expand across the world and more people jump on the information super highway it has helped so many social related companies. I honestly think Apple computer is the pinnacle player in this realm. They have high margins and high volume. Apple continues to innovate and create new products for the next generation of the technology evolution. Apple will possibly the first US company to hit a 1 trillion market cap. To gain another 300 billion in market value requires another 2-3 years of great innovation and wonderfull sales tactics which Apple has always been able to deliver.

Surprise No 5: Healthcare continues outperform

 Companies like Wallgreens and CVS are going to continue higher. Health related sector has gained massively from Obama care.  All sorts of health related companies now are gaining value from the regulation in healthcare. The government is splitting the costs of drugs.

Surprise No 6: Autos outperform

 If oil continues to stay low this may create an opportunity for car makers and dealers to do better then expected and the lack for E/V cars fall as people flock traditional gas vehicles.  Auto makers and dealers will continue higher into 2015 as the big three sell more cars ever than before in recent history. The better economy helps all auto dealers wit low interst rates on auto loans.

Surprise No 7:  Electric cars demand fall bad for TSLA

 I think TSLA will not do so well in 2015 because lack of demand for electric will be delayed until oil stabilizes. This is bearish for Tesla motors and the stock may head down to the $120 level during 2015. Tesla will rebound eventually as oil prices continue higher in the back half of 2015.

Surprise No 8: Bond Yields Rise

The long bubble in the bond market will finally come to an end as the payout of bonds to stocks has finally begin to shift the reversal. The moves by the fed will switch the trend from equities to bonds in the back half of 2015.

Surprise No 9: China housing crashes 

I think the long awaited crash in the housing bubble of china begins to break down asset prices. China will have to devalue its currency to deal with the major housing collapse. They have been building one stop without the need for organic growth. Sooner or later this market will collapse. This could also spill over into all markets and become a catalyst for a selloff in all asset prices in the world

Surprise No 10: Inflation comes back

 I think the low oil prices coupled with easy money printing as well as a good economy with jobs will finally create asset inflation for the common folks of the economy. This will jack up asset prices in consumer inflation. This is the ugly form of inflation that hurts consumers. This will spur the fed to raise interest rates quicker than expected.