First of all let me say, macro investing is not my style. None the less like a chocaholic, I can’t help myself. So without further ado my 2012 predictions, they are:
- The trade down economy will continue to be resilient. People will continue clipping coupons, searching for ways to make a dollar go further, and making less do more. It’s bleak, depressing, and if you can find any untapped ideas, you’ll make a lot of money here. As the lady said, let them eat cake. I’m not talking about cheesecake either. Long Mickey D. Short Cheesecake Factory.
- Dividends will be king. I posted earlier on this and expect SDY and other dividend ETFs to be the next bubble. SDY will could go up 85% if the dividends stay constant and investors accept 2% instead of 3.3%. Apple will probably pay a dividend start at 2.00%. Sometime in January when the Company announces record 4th quarter earnings will be a good time to announce it. The market is expecting it and the market usually gets what it wants one way or the other.
- The euro will end the year higher than the U.S. Dollar. Unlike the United States, Europe seems to be making the tough budgetary choices it needs to get on firmer financial footing. There will be riots and unrest but sinking into the abyss is not an option. The silent majority will not tolerate that.
- Interest rates will be unchanged. They probably can’t go much lower as short-term rates are near zero. I’m doubtful that the economy will be robust enough for them to rise. Try selling out of the money puts and calls if you can find some beta.
- Something good will happen. I have no idea of what it could be but pessimism is rampant and the least expected thing would be something good.
- El Paso Kinder Morgan merger will be denied by Justice Deparment on Hart Scott Rodino Anti-trust. The merger of the number one and number two pipeline companies will be denied by the Obama Justic Department as it should be. Massive Black Swan profits to be made by EP April Puts.