Next Forecast: You'll review Markman's '07 predictions
Posted
Jan 04 2008, 02:35 PM
by
Jon Markman
Whenever your job is getting you down, just be glad you aren’t a financial journalist who has to make annual predictions that live forever on the web. Since the advent of MSN Search and Google, there is no hiding my most unfortunate calls in the drawer anymore. It’s all out there. So as an addendum to my 2008 forecast, which you can read right here, here’s how my '07 predictions fared.
1. Bull market, year 5. Well, sort of. I forecast an S&P 500 gain of 13% on 2007. We got 3.5%. The Nasdaq 100 did go up 19%, though, so let’s average them out and call it good.
2. Goldilocks lives! I forecast modestly rising inflation, modest job growth and below-trend U.S. economic growth of 2.6%. This was right on, as annualized growth came to 2.8% in 2007.
3. Heads will roll at S&P. This was right for the wrong reason. I forecast that the folks in charge of adding and subtracting companies from the S&P 500 Index would face censure for the lousy job they have done in most years, always adding momentum stocks and pulling out value stocks. Yet they actually did a reasonably decent in 2007, adding around 35 mostly solid stocks -- here's the list -- to replace companies that had either been merged out of existence or become irrelevant. Smart adds included solar wafer maker MEMC Electronic, Gamestop and Leucadia National. Stinkers were American Capital Strategies, General Growth Properties and Microchip Technology. However, there are likely to be a lot of lost jobs at S&P over its bond-rating division’s unbelievably poor judgment in giving AAA ratings to many asset-backed securities.
4. Gimme growth. I forecast that large-cap growth stocks would lead the market this year, pushing aside the previous few years’ darlings: small-caps and value. This was right, though I only went two for two in picking growth stocks to take advantage of the idea. My picks were Halliburton, which rose 23%; Baxter, which rose 27%; Applied Materials, which fell 2.6%; and Comcast, which fell 35%. Strangely enough that averages to a gain of 3.5%, which was the exact advance of the broad market. Weird.
5. Beijing on track. I forecast that China would get its act together on pollution well before the Olympic games next August and that a company company called Fuel Tech would play a major role. Not so much. Beijing is still smoggy, and while FTEK rose 42% by mid-year it ultimately fell back to close the year with an 8% loss.
6. You make me laugh. You can say that again, but for the wrong reason. I forecast that media and entertainment companies would make a brilliant comeback in 2007 after a poor 2006, led by a resurgent Walt Disney, News Corp., Lin TV, Gray Television, New York Times, Gannett and Yahoo! I totally blew this one. Most of these stocks were crushed, falling 4% (Disney) to 34% (Gannett). Not funny.
7. Pimp my ride. I figured new management at Ford would improve design and cut costs enough to send the stock, then at $7.50, to hit $9.75 over the next year. Just barely missed this one by a nickel -- good enough -- as the stock got to a high of $9.70 in June before crashing all the way back to $6.75.
8. Madame President. Just to throw out a really crazy idea, I forecast that President Bush and Vice President Cheney would resign rather mid-year rather than face impeachment hearings from a resurgent Congress, and that Nancy Pelosi would become president. It turned out that the Democrats wimped out once they took over the Hill, so Iraq War hearings were a non-starter.
Of course, forecasting is not a once-a-year event for me. For a look at how how all my picks during the year fared, check out this column, which pegs the return for all my stock picks in 2007 at 14%.
Look for updates of my 2008 forecasts here from time to time over the rest of the year.
