Speculating About 2014

  • Posted by
  • on December 18th, 2013

There are two types of forecasts – lucky and wrong. Here are my educated guesses and speculations about 2014:

1) In 2014, we will see an uptick in Volatility and correlation. All corrections in 2013 were minor and took the form of sector rotation. The deepest $SPX pullback in 2013 was less than 8%. We will see a lot deeper correction in 2014 – to the tune of 15% to 20% that will test and slice below $SPX’s 200-day moving average. This correction will be an amazing buying opportunity for both, long-term investors, who will be able to snatch high-quality brands at lower prices, and for momentum investors, who will be able to buy breakouts from sound weekly bases. The best time to buy a long-term position is when the main market indexes are down 10% and select, high-growth stocks start breaking out to 52-week highs despite the general market weakness.

2) The best performing stocks of 2014 will come from an industry very few people expect. The best performers in 2012 and 2013 had 3 common traits:
a) they came from industries that almost everyone hated at the beginning of each respective year. Those industries were hated, because they lost many investors a lot of money in the previous several years.
b) those industries were highly shorted
c) after underperforming for > 2-3 years, more and more members from those industries suddenly started to appear on the 52-week high list
In 2012, housing stocks were the brightest stars in the market – when they started to clear new 52-week highs from solid bases, the housing recovery was still questionable and no one believed those moves. In 2013, solar stocks came out of nowhere and crushed all other industries. Many watched in disbelief and mocked them, while left for dead solar stocks rallied 200% to 1000%. The one industry that currently meets the above mentioned 3 criteria is shipping. Watch the shippers. They have the potential to be the biggest surprises in 2014.

3) Upside momentum will continue to work. Here’s a little “secret” about price momentum as an equity selection tool. It works best with neglected stocks.

4) Some of the biggest losers of 2013 will turn into the biggest gainers in 2014. It happens every year with liquid stocks. Look at $NFLX, $BBY and $FSLR. Mean reversion works in over-followed, highly liquid names such as the members of the S & P 500 and the Nasdaq 100. The absolute worst performing $SPX stock for the past couple years is $JCP. There are two scenarios for $JCP in 2014 – it either files for chapter 11 (it is pretty much priced for that) or it finds its footing and rallies more than 300%.

5) Apple will come up with a bigger-screen iPhone and it will be awesome. It will be a huge success, but it will cannibalize from its iPads’ sales. Apple will also launch smart watches with bendable glass – it will be a huge hit and a new catalyst for it. Carl Icahn will call Tim Cook and invite him for steak. He will tweet about it.

6) $TWTR will reach $80 at some point, but it will have a 50% correction along the way – it is something typical for all long-term market winners.

7) More people will start paying for everything with their smart phones. Credit cards will gradually become relicts and collector items.

8) All crypto currencies will experience 80%+ correction at some point in 2014. This will be a buying opportunity. Venture capitalists and angel investors will invests tens of millions of dollars in startups, specializing in Bitcoin-like technology.

9. Facebook will buy Tinder.

10. $HLF will go over $100 and Bill Ackman will cover part of his short. He will keep the bulk of it until he retires or until he is right, whichever comes first. His company will see an increase in redemptions.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

blog comments powered by Disqus
Ivan Hoff Blog