Sitting here with a glass of Port Ellen scotch and thinking about the new year: We live in interesting times and are about to move into a year with less smooth and more crunch. A friend an myself compare notes on the markets and finally we see our predictions coming true. A year or two later than I expected but it now seems like the crunch will be much harder than if the hit had been taken earlier. My summary for the new year:
- Growth in western economies will slow.
- The S&P 500 index will fall by 10%
- Tech stock speculation will push up companies like Apple and Google by another 100% before the multiples get too long and we see a long overdue correction. Value investors have long since deserted the sexy stocks and moved back to fundamentals with good multiples. Expect speculators to be burned.
- The new topic of London dinner parties turns to being unable to find tenants for their buy-to-let.
- the soap opera of lost government data will continue
Expect more soul searching as the crunch takes hold. Now may be a time to invest in publishers of books covering frugality.