Venkytalks

I wish everyone on this forum a very happy new year.

My two cents worth of predictions for 2010:

Q1-Q2 2010:

US will see recession and a stock market collapse.

China will see RE and stock market collapse.

Indias stock market will top out by Feb 2010 and will start falling after budget and keep falling throughout rest of 2010.

RE prices in India will stop rising and there will be few sales after budget. New launched projects will stall. Prices will stay steady or dip 5-10% (in affordable apts) or 10-20% in luxury apts.

Gold will rise 20-40% in dollars (1400 per ounce)

Q3-Q4 2010:

We will see Shanghai 2000, Dow 8000, Sen 12000.

Commodity prices will collapse. Metal stocks will do badly (exit by Q2).

Gold might slowly fall, but I am not sure - might keep rising - unpredictable.

RE companies will face fresh liquidity problems as interest rates will rise. There will be no more buying in RE.

End 2009 marks the end of lift in RE sales and prices, reflecting pent up demand and 6th pay commission arrear related sales.

Fresh launched projects of Dec 2009 will see no sales and will take a long time to build too.

The phony recovery will be over in 2010 and the return of bear markets and recession seems unstoppable.

wiseman

Venky,

I have only one doubt. If US Stocks collapse, it will only fall to 8000?

Shanghai drop from 3100 to 2000 is a 35% fall, Sensx drop from 17500 to 12000 is a 31% falland both these are relatively stronger economies with lower Debt to GDP ratios.

Dow drop from 10500 to 8000 is "only" a 24% fall for the weakest of the 3 economies? How about a bigger drop to its previous bottom of 6400, which will give a 39% drop? Question is, when the next series of bailouts start, will it brerak the previous bottom this year itself?

cheers

yatinc

What is ur basis of prediction?

Venkytalks

I think Dow will fall for the next 20 years.

I expect it to fall 20% in the next 6 months, rise and then then keep falling with lower tops and bottoms for maybe 3 years. It will go to sleep in a dungeon after that.

In real terms, Dow will fall more. Because of inflation, which will keep the dollar price for shares at the same level even as poor economy will lower share value, nominal Dow will fall less.

There is a possibility that US might go into a deflationary spiral. But I am not at all sure, gut tells me stagflation. In US RE, I am sure of 20 years deflation though.

Short term interest rates will be kept as low as possible by the fed. Its a delicate balance. US fed action will be ineffective, but easing by ECB, China, Brazil/Russia (bothered by falling commodity prices) will prevent global deflation.

Stagflation is my bet.

India will see higher interest rates and high inflation (no deflation in India, I am 100% sure). We are the only country without overcapacity in anything (RE included).

USA has many million homes more than number of households (1.8 million or 18 million empty houses from what I remember. Anyone have exact data?).

China has no slums - it also has more homes than households, although many are two room hovels (better than juggi). These homes are all that the Chinese can afford though - they cant afford to live in the palatial flats they have built. Banks which have financed Chinese RE will go belly up. Most Chinese banks are now Zombies, people just havent seen the dead eyes of the zombie yet, that is all.

Despite low fed short term rate, bond yields will go up.

Idiotic 401 K investors who sold stocks after the crash and went into bond funds will lose half of their capital values, as yields will double. Americans have been total idiots this decade. They have fled to the safety of treasuries through bond funds - a good trade when fed was lowering, a really bad investment to hold as rates rise, no safety there at all!

Total total idiots. I expect them to watch their 401k fall further as bonds crash, then exit bond funds after they have taken their fall, shift to equity which will shore up values for a while in 2010 and early 2011 and then stare at further erosion as their shares in broken companies yield nothing.

Americans are so badly screwed, so solidly screwed. Their capital (of 50 years of work) is now burnt to ashes. The baby boomers have crapped on their dinner plate.

Equally doomed are Indian IT and other outsourcing ventures. Stay away from their stocks.

I base all predictions on gut feeling, on data absorbed here and there on the internet. Nothing more. I am not an analyst, I am a consumer of analysis

So Wiseman, 8000 is a guesstimate. Could be 6400 too.

But I prefer 6400 for 2012, 4000 for 2015 for the Dow.

There can be no more bailouts. Not possible, USA is bust. The more it prints, the more US pensioners will get screwed and blame Obama for it. No way Obama will print more money, not if he wants to win the next election.

In any case, Obama will lose the next election. He is going the way of Jimmy Carter.

nmayur

It is great to see your indepth research and i appreciate you sharing with us ,your words are very effective and can make or break things .
Without doubting your research ,can i ask you where have you got these results from .
Bcoz if you have concluded ,then the govt may be thinking of all this scenes to and there will be necessary steps taken to avoid .
I want to buy too but just waiting for a concrete vision and dnt want to be scrambled in this market .

wiseman

Folks,

I just thought I would share some data and insights into External Trade from Apr 2006 till latest figure, Nov 2009.

Check out the chart I'd prepared from Govt monthly data on Merchant Exports, Imports and a separate figure for Oil imports (which is a significant chunk of imports).

In brief, here are some of the conclusions ...

1. You can see a classic case of reversion to the mean in all these trends.
First due to boom all of them went soaring above the trendlines, specially in 2008 till July/Aug 2008, when exports peaked at $ 19.04 Billion in July 2008 and Imports peaked at $ 33.51 Billion in Aug 2008. This is the time the crisis actually hit in the US, remember?

2. Then all hell broke loose and values crashed steeply until Mar/April 2009 when Imports bottomed at $ 15.56 Billion in Mar 2009 (a 50% fall!), exports bottomed at $ 10.74 Billion in Apr 2009 (a 43.6% fall!). This is around the time Stocks bottomed and started to rise (coincidence?)

3. Since then the stimulus has kicked in and exports seems to have leveled off around $ 13.20 Billion in Oct & Nov 2009 (still 30.72% below the peak, though 22.8% above the bottom!) and imports around $ 21.90 Billion in Nov 2009 (still 29.50% below the peak though 39.6% above the bottom!).

Note that, throughout, imports are always much higher than exports and strangely enough the Trade Deficit is nearly equal to oil imports all the time!!!

All of these are still below the trendlines but only just and seem to have leveled off. Therefore, for next few months till end of 2010, we will see yoy growth but a flat one (because numbers one year back were lower; thus a low base effect), but in absolute numbers we are still around 30% below peak exports and imports but near the long term trendline. So, are we back to lower exports/imports on a longer term basis compared to 2008 spike??? Time will tell!

cheers

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preet99

So it true that Market will continue to collapse in 2010 , shall I wait more to buy property in Pune ?

Venkytalks

Preet, always diversify. 1/3 rd money in RE at all times.

Dont time.

billybob2

Interesting to see such emotional plea towards doom and gloom.

Doomers seem to discount a few factors - US resources (timber/coal/grain/ferti/minerals/natgas/untapped reserves), stable financial systems (despite the tsunamis it is one of the best), ingenuity (think Google//disney/Dreamliner/avatar) and work-ethics.

Slowdown in US - yes, blood in the streets maybe..lost empire..Not yet.

btw re: predictions: business as usual..get a few blips here and few blips there. A country goes bankrupt - but then the rest of the world will bails it out. US tries to consolidate wealth - with marginal success. And Tibet will not gain independence.

Now only if I could predict who would win the superbowl, I can make some serious money...cheers

bb2

RAJESHP

Venkytalks,

Predictions based on nothing dont mean anything. Please support your predictions with valid reasons you think that support these predictions.

Dow will fall next 20 yrs, such strong statements without any valid reasons? You mean to say 401K of all the Americans is in Trouble?