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Five Predictions for 2013

Guns, Housing, FCs, Dragons, and Fed Fighters

Posted December 18, 2012

Yogi Berra once said, "Prediction is very hard, especially about the future."

But today we are going to do it anyway.

Here are five things I think about the future...

Fed Fighters

Bernanke announced QE4 last week, saying he will buy $85 billion a month in government bond and mortgage purchases until unemployment drops below 6.5%.

Given our current job creation rate of 150,000 a month, the U.S. won't drop below 6.5% unemployment until 2018...

That said, quantitative easing announcements are having a reduced and shorter-lasting effect on the market. And they continue to add to the national debt.

Prediction: 2.5% mortgage rates on the 30-year. Real estate prices climb 12% in 2013.

The Dragon's Bounces

The Shanghai 180 Index put in its biggest one-day gain of the year on Friday. 

China's manufacturing activity rose to a 14-month high:

china dec 17

This chart reminds me of the NASDAQ a few years after the dot-com bust, when it went from 1,300 in 2003 to 2,850 in 2007.

The overwhelming sentiment on China has been bearish for a few years now. As a contrarian, this is bullish. If we break that downtrend, I'll be a big buyer.

Prediction: Shanghai 180 Index will hit 8,000.

Fiscal Cliff Relief Rally

This chart reminds me of the NASDAQ a few years after the dot-com bust, when it went from 1,300 in 2003 to 2,850 in 2007.

The overwhelming sentiment on China has been bearish for a few years now. As a contrarian, this is bullish. If we break that downtrend, I'll be a big buyer.

Prediction: Shanghai 180 Index will hit 8,000.

Fiscal Cliff Relief Rally

We all know about the fiscal cliff by now. It's a lot of fearmongering and finger-pointing among the liars and thieves who lead this country.

Any deal made over the next few months will cause a huge relief rally.

I feel the government will get a deal, because if there is one thing politicians can agree on, it's that it's fun to spend other people's money.

That said, look for a sell-off going into the New Year.

Investors will take gains/sell losers to limit their tax liability next year. There are always investors who do this at the last minute.

Plan on buying on weakness after Christmas and before January 1.

Prediction: Can gets kicked. The debt level will surpass $18 trillion by the end of 2013.

Google Hires Ray Kurzweil

Ray Kurzweil is best-known for his 2005 book, The Singularity is Near.

The singularity is the point at which artificial intelligence becomes better than human intelligence. This will create a knowledge boom at an exponential pace and change the world in ways we can't imagine.

Kurzweil says he’ll be working for Google on “new projects involving machine learning and language processing.”

Steve Wozniak, co-founder of Apple, in on record as saying AI is the next step: “We're still not at the stage where we can sit down with computers and say, 'Here's a problem. Now go and solve it.' But that day isn't too far off... In 40 years, we will have computers that are conscious, that have feelings, that have a personality.”

Prediction: Apple or Google will have an AI breakthrough in 2013.

They Will Come for Your Guns

Gun sales have been red-hot over the past five years. Gun stocks like Smith & Wesson (NASDAQ: SWHC) and Sturm, Ruger & Co. (NYSE: RGR) have been doing very well. RGR's quarterly revenue was up 47% over last year.

People were buying guns in anticipation of President Obama enacting stronger federal gun controls...

They were right. He will.

After the elementary school massacre last week, gun stocks opened down. The uptrend is broken.

swhc dec 17

Prediction: No new highs for gun stocks in 2013. There will be gun control legislation. It won't stop mass shootings.

I will have five more 2013 predictions for you on Thursday — including insights on gold, oil, and silver...

Until then,

Christian DeHaemer Signature

Christian DeHaemer

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Since 1995, Christian DeHaemer has specialized in frontier market opportunities. He has traveled extensively and invested in places as varied as Cuba, Mongolia, and Kenya. Chris believes the best way to make money is to get there first with the most. Christian is the founder of Crisis & Opportunity and Managing Director of Wealth Daily. He is also a contributor for Energy & Capital. For more on Christian, see his editor's page.


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