Saturday, January 1, 2011

Predictions for 2011

I have no idea how the markets will end in January, let alone 2011. If that seems like a funny way for starting a post titled "Predictions for 2011", then read on......In my humble opinion, all these year beginning predictions are good for is gloating at the end of the year in case they do come correct. As a short term trader, I don't care which way the markets head from here as long as I am on the right side of the trade, and so shouldn't you. Bull markets, bear markets, corrections etc are excuses best left for mutual fund managers and going by their records of last year, even hedge fund managers. As short term traders, our job is to make money irrespective of the direction of the markets.

In fact, let me take this discussion a bit further by saying that all these yearly predictions do more harm than good. Suppose, I predict that Apple will hit 500 by the year end. As a result of this prediction and wanting to be proved right (who doesn't like being right?!), I will be looking at Apple through tainted glasses all year. Let's leave the yearly predictions to the economists (and recent times have proved how much do they know!). As short term traders, our only goals should be to try and become the best traders we can become. Let 2011 be a step in that direction!

Take care and good luck!


Bill said...

PT i love your confidence in your methods, very solid. I on the other hand love economics and longer term trading. And even though i am no prophet or magician i will reiterate my outlook for 2011. I am not a professional and make no income from telling anyone how to trade so other than personal gratification i couldn't care less if people think/know if i am right or wrong. This is how i see it.

January is tough for me to call, i think it could go either way but it seems more likely for the indexes to fall than to continue higher but im rather uncertain how the start of 2011 will go.
Mid Feb - Aug: I have a strong feeling February will be a tipping point for the market either extreme highs or a hard fast pull back but this time my gut and the numbers are not looking good. Febuary very well could see nearly a %20 pullback in the indexes. There's too many problems starting to boil, yes everyone knows about state budgets and muni debt and CDS are rising BUT right now Europe will become a more immediate focus. The PIGGSB will take center stage very quickly again as Greece and Portugaul will begin to near crucial public auction dates where they need their rates to be significantly lower than where they currently are to justify the cost of borrowing. This will intensify pressure and panic and bonds will start to get dumped. The worse the Euro gets the worse off for equity's b/c a high dollar is a deterrent for foreign investment. I think commodities sky as people lose faith in business and government which ultimately will cause hyper inflation and soon after stagflation.

Now will all this happen in feb? NO. it could take 2 years. But the economic conditions are ripe for a severe pullback and i think the next headline my read "My Bloody Valentine: Stocks Get Slaughtered".

This prediction could be a little premature but then again no one can predict the future and i actually hope im wrong but i call it how i see it.

Happy Trading! Thnx again PT.

BTW did you miss EDMC's flight last week? I missed it by 1 day, oh well you win some and you lose some.

Doctor Stock said...

Great point - sometimes when we make predictions we want so badly to be correct that it hurts us in the long run causing us to do things we normally wouldn't. Best to you in 2011.