2021 Market predictions

[vand]

For a bit of fun, let have your predictions for this year...

Can be any markets that you have conviction about, not just stocks.


Here's mine:

S&P
About the same; will switch from leader to laggard globally as investors prefer international markets, with a lot of volatility over the course of the year as we have a big blowoff top and then a big correction

Nasdaq
DOWN fairly heavily by year end. Blowoff top will crash and then it will not bounce back in the same way as it has previously

International stocks
UP moderately, beating the S&P as investors seek lower valuations elsewhere

USD
DOWN - bear market here to continue to run

Long term Treasuries
UP mildly - a difficult year for equities will send more investors fleeing to fixed income

Bitcoin
Haha. no idea. Could quadruple or lose 90% again, and neither would surprise me.
But I'll go with finishing the year with over 50% loss.

Commodities
Up strongly. New bull market will get underway as all that money printed seeps into the traditional inflationary hedges.

Gold/PMs
Up strongly, but only in a strong bull market way, not a blowoff top way.

Real estate
Generally down a few percent as lending is tightened and the froth of 2020 is blown off

[MustacheAndaHalf]

I predict Macy's will recover +25% from it's current price, breaking $14/share.
I predict Carnival Cruises will go up much more than +50% from here, over $32/share.
I've invested in both stocks.  They were hit hard by Covid, but have done well as the recovery unfolded.  As vaccinations roll out, I expect more recovery.

If most people spent CARES act money on necessities like rent and food, then I imagine it will cause less inflation than expected.  People in the lowest 1/3rd spend more money than they take in, going into debt.  Since relief efforts aimed at people with lower (or lost) incomes, I expect most of that money went to food and rent.  At the same time, many businesses closed or abandoned places with high rents.  So landlords probably had mixed results.  Maybe I'm too influenced by the Global Financial Crisis, after which inflation was predicted and didn't show up.

Gold has done very well for 2 years (2019 +18.5%, 2020 +25%), but if fears of inflation subside, I think gold's gains subside with it.  So "less than 10%" in 2021?

[cool7hand]

My prediction: whatever I guess at, I'll be wrong. So I'm sticking with our portfolio and monitoring it periodically to decide when to rebalance.

[waltworks]

Lending is actually reasonably tight on RE, I personally predict more craziness in desirable WFH vacation markets, and further declines in rent and maybe also price in cities.

This assumes crazy stupid low interest rates remain in place.

I predict very modest (ie a few percent) gain/loss/stagnation for stocks in general unless a ton more undirected stimulus money gets handed out to people who don't need it, in which case I predict up 20-25%.

-W

[Mr. Green]

S&P 500 up 20% as the pandemic subsides and people come out of the woodwork and consumer spending increases.

[Much Fishing to Do]

What blows me away is what is required to make a "bold" prediction.  Unless I misunderstand the Vix (very possible I do), to guess the market is to drop or rise up to 28% (the current VIX reading) in the next year is taking a conservative viewpoint (staying within one standard deviation).  So only the pundits out there that are predicting a move greater than 28% for 2021 are being even slightly aggressive, and in fact only half the time should this stay within.  In fact there would be just as good a chance the market move will be more than 0.675 SDs than less than, so there is just as good a chance the market will move more than 19% than less than?  That seems crazy but is how I currently understand it.

[ender]

I predict I'll max out my 401k and IRAs.

[vand]

What blows me away is what is required to make a "bold" prediction.  Unless I misunderstand the Vix (very possible I do), to guess the market is to drop or rise up to 28% (the current VIX reading) in the next year is taking a conservative viewpoint (staying within one standard deviation).  So only the pundits out there that are predicting a move greater than 28% for 2021 are being even slightly aggressive, and in fact only half the time should this stay within.  In fact there would be just as good a chance the market move will be more than 0.675 SDs than less than, so there is just as good a chance the market will move more than 19% than less than?  That seems crazy but is how I currently understand it.

As I understand it, a VIX number is 1 standard deviation +/-

It doesn't mean that the market is expected to be 28% away from the current price, it just means that the implied range of outcomes is wider and a larger move is more likely.

[HPstache]

S&P down 10% by end of year
Gold over $2,200 by end of year
Bitcoin down 50% by end of year

I seem to remember a market prediction thread for 2020... can anyone find that to see how we did?

[Much Fishing to Do]

What blows me away is what is required to make a "bold" prediction.  Unless I misunderstand the Vix (very possible I do), to guess the market is to drop or rise up to 28% (the current VIX reading) in the next year is taking a conservative viewpoint (staying within one standard deviation).  So only the pundits out there that are predicting a move greater than 28% for 2021 are being even slightly aggressive, and in fact only half the time should this stay within.  In fact there would be just as good a chance the market move will be more than 0.675 SDs than less than, so there is just as good a chance the market will move more than 19% than less than?  That seems crazy but is how I currently understand it.

As I understand it, a VIX number is 1 standard deviation +/-

It doesn't mean that the market is expected to be 28% away from the current price, it just means that the implied range of outcomes is wider and a larger move is more likely.

Right, its just that number for a single SD seems so large to me in relation to the percentage of likely outcomes (33%) that will be beyond that range.  To make it more meaningful in my mind, I like to look at +/- two-thirds of a SD, because that should capture about half of the values.  And doing that I think the VIX is saying there is a 50% chance the market will move more  than 19% this year. 

[ChpBstrd]

S&P and Nasdaq
+20% up as the valuation bubble reaches its endgame. 2021=1999.

International Stocks
+10% up as they lag the US bubble and developing markets have a hard time getting vaccines.

USD
+5% because QE is done for a while, Trump is gone, and Washington gridlock/stability is the new normal.

Long-Term Treasuries
Flat for most of 2020, but could get hammered in the 3rd or 4th quarter by a higher than expected inflation read.

Bitcoin
Down 50%

Commodities
Oil up 15%

Gold/PMs
Gold down 5%

Real Estate
Urban HCOL areas: decline 5%
Smaller cities/towns or rural: increase 5%

2021 will be a waiting game for the next crisis: Will it be urban real estate loans, inflation setting off a treasuries rout, or the tech and crypto bubble bursting? But I expect the next 20% correction to occur in 2022. There's too much stimulus headwind right now, and any vaccine news is good news.

[tsukuba]

Bond yields rise making returns on typical bond funds not a happy story.

[ChpBstrd]

Bond yields rise making returns on typical bond funds not a happy story.

If that happens, it won't be a happy story for anything but cash.

[vand]

Bond yields rise making returns on typical bond funds not a happy story.

If that happens, it won't be a happy story for anything but cash.

Bonds are supposed to hedge risker assets like stocks. Yields might rise because of a preference for riskier assets, in which case your stocks will more than compensate.

If yields rise because of inflationary concerns that would be worse, but then real assets will be the natural beneficiary.

[tsukuba]

Bond yields rise making returns on typical bond funds not a happy story.

If that happens, it won't be a happy story for anything but cash.

I was reading a bit about this (emphasis on: a bit). My take away was that stock of companies that provide products that people want to buy --something innovative, improving productivity -- should do OK.  For example, Intel in the 1970s, a period of stagflation.

[MustacheAndaHalf]

I predict Macy's will recover +25% from it's current price, breaking $14/share.

Macy's broke $15/sh today, at which point I sold some of my call options, and is now trading at $14.59/sh.  That was fast: Macy's rose +30% in 3 weeks!

[ChpBstrd]

Bond yields rise making returns on typical bond funds not a happy story.

If that happens, it won't be a happy story for anything but cash.

I was reading a bit about this (emphasis on: a bit). My take away was that stock of companies that provide products that people want to buy --something innovative, improving productivity -- should do OK.  For example, Intel in the 1970s, a period of stagflation.

I bet Intel in the 1970's had a reasonable PE or PEG ratio. Could they have done well starting at, say, 35 or 100?

[ChpBstrd]

I predict Macy's will recover +25% from it's current price, breaking $14/share.

Macy's broke $15/sh today, at which point I sold some of my call options, and is now trading at $14.59/sh.  That was fast: Macy's rose +30% in 3 weeks!

Looks like anything with short interest >20% is being run up. DDS and some micro pharma companies are doing the same thing.

GME is only the headline. Everything heavily shorted is going to the moon. I wonder if this is related to the fall of XLF which started Jan 14 (bankrupt hedge funds are messy for banks and investment firms)?

[HPstache]

I predict Macy's will recover +25% from it's current price, breaking $14/share.

Macy's broke $15/sh today, at which point I sold some of my call options, and is now trading at $14.59/sh.  That was fast: Macy's rose +30% in 3 weeks!

Looks like anything with short interest >20% is being run up. DDS and some micro pharma companies are doing the same thing.

GME is only the headline. Everything heavily shorted is going to the moon. I wonder if this is related to the fall of XLF which started Jan 14 (bankrupt hedge funds are messy for banks and investment firms)?

I believe something that all of these have in common is that the subreddit members of WallStreetBets are running these up... they are literally manipulating the market for these stocks.  Crazy.

[ChpBstrd]

I predict Macy's will recover +25% from it's current price, breaking $14/share.

Macy's broke $15/sh today, at which point I sold some of my call options, and is now trading at $14.59/sh.  That was fast: Macy's rose +30% in 3 weeks!

Looks like anything with short interest >20% is being run up. DDS and some micro pharma companies are doing the same thing.

GME is only the headline. Everything heavily shorted is going to the moon. I wonder if this is related to the fall of XLF which started Jan 14 (bankrupt hedge funds are messy for banks and investment firms)?

I believe something that all of these have in common is that the subreddit members of WallStreetBets are running these up... they are literally manipulating the market for these stocks.  Crazy.

They don't have to explicitly run them up either. People who see what happened with GME are running screens to find highly shorted stocks, and they're piling into names like DDS (35% SI on 12/31/20) and SENS (31% SI on 12/31/20). Not much talk about these on wsb.

The interesting dynamic is how this phenomenon feeds on itself. As the price of these high-risk stocks rises, the rationale to short them increases, and as the shorts increase, the squeeze increases. How long can this play out? < Million dollar question.

[HPstache]

I predict Macy's will recover +25% from it's current price, breaking $14/share.

Macy's broke $15/sh today, at which point I sold some of my call options, and is now trading at $14.59/sh.  That was fast: Macy's rose +30% in 3 weeks!

Looks like anything with short interest >20% is being run up. DDS and some micro pharma companies are doing the same thing.

GME is only the headline. Everything heavily shorted is going to the moon. I wonder if this is related to the fall of XLF which started Jan 14 (bankrupt hedge funds are messy for banks and investment firms)?

I believe something that all of these have in common is that the subreddit members of WallStreetBets are running these up... they are literally manipulating the market for these stocks.  Crazy.

They don't have to explicitly run them up either. People who see what happened with GME are running screens to find highly shorted stocks, and they're piling into names like DDS (35% SI on 12/31/20) and SENS (31% SI on 12/31/20). Not much talk about these on wsb.

The interesting dynamic is how this phenomenon feeds on itself. As the price of these high-risk stocks rises, the rationale to short them increases, and as the shorts increase, the squeeze increases. How long can this play out? < Million dollar question.

Probably can also explain phenomenons such as Hertz 2020 and even Tesla 2018/2019...

[ender]

I predict Macy's will recover +25% from it's current price, breaking $14/share.

Macy's broke $15/sh today, at which point I sold some of my call options, and is now trading at $14.59/sh.  That was fast: Macy's rose +30% in 3 weeks!

Looks like anything with short interest >20% is being run up. DDS and some micro pharma companies are doing the same thing.

GME is only the headline. Everything heavily shorted is going to the moon. I wonder if this is related to the fall of XLF which started Jan 14 (bankrupt hedge funds are messy for banks and investment firms)?

I believe something that all of these have in common is that the subreddit members of WallStreetBets are running these up... they are literally manipulating the market for these stocks.  Crazy.

How is WSB collectively doing this any different than analysts talking about what stocks are under/overvalued?

[Travis]

I predict Macy's will recover +25% from it's current price, breaking $14/share.

Macy's broke $15/sh today, at which point I sold some of my call options, and is now trading at $14.59/sh.  That was fast: Macy's rose +30% in 3 weeks!

Looks like anything with short interest >20% is being run up. DDS and some micro pharma companies are doing the same thing.

GME is only the headline. Everything heavily shorted is going to the moon. I wonder if this is related to the fall of XLF which started Jan 14 (bankrupt hedge funds are messy for banks and investment firms)?

I believe something that all of these have in common is that the subreddit members of WallStreetBets are running these up... they are literally manipulating the market for these stocks.  Crazy.

How is WSB collectively doing this any different than analysts talking about what stocks are under/overvalued?

I haven't been to the subreddit, but were they just discussing the stock, or actively organizing the buys with a game plan in mind? "Buy this up to screw the short sellers this week!"

[MustacheAndaHalf]

Combining my prediction and the topic, Macy's has (had?) 40% short interest.  This past week it touched $21/sh briefly, then dropped back down.  It seems to be up +5% in pre-market trading, as compared to GME up +82% pre-market.

Maybe they picked a stock with momentum of +4500% in one year?  I'm joking.  But I think they took aim at highly shorted stocks, like in the case of GameStop, over 100% of the shares.  The same shares could change hands multiple times, but it's unlikely there is enough volume to avoid a short squeeze.  Add tons of buying power to all that, and you get a short squeeze + options squeeze.

So when does GME fall back to $20/share?  What are people's predictions?

[blue_green_sparks]

Mostly based on the natural economic pendulum effect and several economists, I think perhaps a significant 'correction' on oversold equities this year...less so on value stocks and then an economic recovery based on the vaccine success, long-promised infrastructure rebuilds and green energy (that will create good jobs), some rotation of investments into commodities in a rising interest rate environment. I just do not want to be heavy in bonds or over priced tech stocks right now...seem way out of whack ;()