12 Big Surprises for 2005

Editor's note: Jon D. Markman writes a weekly column for CNBC on MSN Money that is republished here on TheStreet.com. He's also a regular contributor to RealMoney, TheStreet.com's subscription site. If you'd like to see all of Jon Markman's RealMoney commentary, click here for information about a free trial.

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The next year stretches out in front of us like a nighttime road in an exotic country: beautiful and strange, yet not entirely unknowable.

At the end of December every year, I attempt to view this land through the prism of the past -- yet with eyes wide open for unexpected vistas. I peer into the dark for surprises and try to see around corners to find twists that might throw investors off track, as well as shortcuts that could make us a few bucks.

Much of what will happen in 2005 will be a continuation of trends in 2004. But new trends will develop as well, sometimes as bizarre, misshapen progeny of the old.

Before venturing forth, let's consider briefly how well I did with last year's predictions. They weren't too bad. My misplaced forecasts were mostly political and economic; my stock ideas were largely on target.

Misses: Osama bin Laden was not conveniently captured just before the November election; job growth did stage a comeback, but then faded; Congress did not make the 2003 tax cuts permanent; the Federal Reserve did not keep interest rates at 45-year lows all year; government corruption did not emerge as the next wave of the mutual fund scandal; and rich-content Internet advertising did not emerge as a hot tech trend.

Hits: Crude oil soared over $35 a barrel and stayed there; the price of gold did fade back to the $375-an-ounce area ($371 to be exact) before moving much higher; stocks that Standard & Poor's removed from the S&P 500 did better than the index; small oil and gas drillers were the hot sectors for momentum traders in the first three quarters of the year; the stock markets of Chile, Brazil, Peru, Mexico and Argentina surged to new highs; and Mr. P, research director of a major East Coast hedge fund who has been highly accurate on tips in the last few years, was dead-on with his prediction of a 5%-8% advance in the S&P 500, concluding with a strong fourth quarter and big swings in commodity prices.