Double Blind

It’s nearing the end of the year, and it is accountability time for the predictions I made back in 2009. I do not anticipate things changing materially between now and the end of the year, so I will issue my report card. These predictions are made purely for entertainment purposes only and while I would look like a clairvoyant genius if I got it all right, it would be purely attributable to luck.

On with the predictions! Remember, at the time I made them (December 2008), I ranked them as (e) = easy, (m) = medium, and (h) = high in terms of risk.

1. (e) Stephen Harper will be Prime Minister on December 31, 2009.

Success. Harper is a brilliant Prime Minister and will be sticking around for many more years. When the public looks around and asks themselves whether they want Harper, Ignatieff, Layton, Duceppe or May to be in the top seat in the country, the choice is obvious.

2. (m) Barack Obama will have an approval rating of less than 40% on December 31, 2009.

Slight failure. The current Rasmussen Report (December 22, 2009) has him at 44%. 44% was a lot lower than what most pundits were willing to predict for the end of 2008, but Obama’s slide in popularity has not surprised me. He inherited a raw hand economically, but despite having huge majorities in the House and Senate, he has been jerked around like a pinball by his own party that isn’t listening to him.

3. (m) Canada’s projected deficit for 2009-2010 (when accounting for actual fiscal performance as judged by the October Fiscal Montior) will be -$30 billion, plus or minus 10%. (i.e. the cumulative deficit from April 2009 to October 2009 will be -17.5 billion).

Failure. The projected deficit is around $57 billion. Corporate tax revenue decreases, combined with excise tax (mainly GST) decreases and the stimulus spending package put this number at a record high. Without the stimulus package, the number would be around $30 billion.

4. (h) Canada will repeal legislation to tax income trust distributions.

Failure. A high-risk prediction that obviously did not occur. There will be a lot of trusts gobbled up in late 2010 and 2011 as the tax shield goes away. Unfortunately, the markets for fixed-income products are quite high and I wouldn’t touch most of them.

5. (h) The yield on a 30-year US treasury bond be below 3% by December 31, 2009.

Big failure. The yield now is around 4.6%.

6. (m) The Canada-US dollar exchange rate will decline (i.e. US dollar will strengthen, CAD will weaken) from January 1 to December 31 (currently 0.8227 as I write this).

Big failure. It is around 94-95 cents on the dollar at the moment.

7. (m) The S&P 500 will close December 31, 2009 at 825, plus or minus 10%.

Big failure. I am so glad I haven’t put any money on these macro predictions, the S&P 500 is around 1100 at the time of this writing.

8. (m) Oil will end the year at US$35/barrel, plus or minus 15%.

Big failure. It is around US$70/barrel, meaning I am massively off.

9. (m) Median condominium sale price in the Greater Vancouver area will decline 18-23% from December 2008 to December 2009.

Big failure. According to the MLSLink housing price index, the average Vancouver “apartment” sold for $333,275 in December 2008, while it sold for $381,945 in November 2009. This is a whopping 14.6% increase.

10. (e) GM or Ford will recapitalize, regardless of any ‘bailout’. (i.e. this will involve the conversion of debt to equity in a bankruptcy or prepackaged arrangement, significantly diluting existing shareholders).

Success. GM recapitalized. Their shareholders got wiped out, although if you were an old shareholder of GM, you can still dump your stock in the in-bankruptcy GM entity, a.k.a. Motors Liquidation Company, for 50 cents currently. I have no idea who the heck is putting a bid on that, they are literally throwing money away.

11. (m) Q4-2009 real GDP will be lower than Q4-2008 real GDP.

Success. Although the Q4-2009 numbers are not out yet, it is very likely, given what we have seen out of Q3-2009 that it will be the case, although by a slimmer margin than I anticipated.

12. (h) At least one Latin American country will go through some sort of ’significant revolution’ by years’ end.

Tough to judge. Honduras has some crisis regarding the president of the country wanting to go beyond his constitutionally mandated term limit, but there wasn’t a “revolution” per se, just a military coup.

13. (h) A nuclear emission will occur in the atmosphere by years’ end. This could be due to either a nuclear meltdown or atmospheric nuclear weapon detonation.

Failure. This is fortunate. I was thinking and still am thinking we will see either some nuclear conflict in the Israel-Iran theater, or some old school nuclear plants in the former USSR which will have safety deficiencies.

14. (m) The USA will not incur a terrorist attack directly resulting in the deaths of more than 5 individuals.

Success.

15. (m) The new Star Trek movie will “suck”. Let’s define “suck” as “not as bad as Star Trek 5, but in or around Star Trek 3, or the last three next generation Star Trek movies”.

Failure. There are $384,953,778 reasons why this prediction failed. Cinematically, it was better than the last three “next generation” movies, but by just a touch. I hope the sequel has a little more substance in the plot. I reviewed the movie here.

16. (e) Canucks will actually make the playoffs this year…
17. (h) … but {the Canucks will} lose in the second round of the playoffs.

Success, and success. Our local team never fails to disappoint the fans of Vancouver, year in and year out.

18. (e) Bittorrent networks, despite bandwidth throttling, packet shaping and other measures by ISPs, will continue to thrive.

Success.

19. (e) By the end of 2009, you still will not be able to find a cell phone plan in Canada that will have 200 minutes, unlimited evening and weekends, caller ID and voicemail for $25/mo. Data rates for mobile phones will still be “ridiculously expensive”.

Success. This might change in 2010, however!

20. (m) Facebook will be somewhat marginalized by the end of 2009; this is sort of analogous to what happened to Myspace in 2006 – i.e. it will still be a significant service, but not the “wonder darling” of the tech industry it used to be.

Slight failure. I’m not sure “marginalized” would be the right word to use for 2009.

21. (e) Facebook and Twitter will not go public.

Success. I can now see Facebook going public in 2010 (primarily so they can liquidate like crazy before their business goes belly-up) but I don’t see Twitter going public.

22. (m) Global warming (climate change) will no longer be the primary environmental focus by year’s end.

Failure. Cophenhagen, anybody?

Summary (out of 22):

Successful predictions: 9
Failed predictions: 12 (5 “big” failures, 2 “slight” failures)
Ambiguous: 1

A lot of my failures were macro market predictions, which should never be taken seriously since so many variables change on the fly during the year. Fortunately that did not translate into lack of investment performance.

Stay tuned for the predictions of 2010 which will be posted here hopefully by years’ end, or early 2010.

This entry was posted on Tuesday, December 22nd, 2009 and is filed under Commentary. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.