While I typically avoid writing stories that list my predictions for the coming year, these are not ordinary times. So here's my list of nine predictions for 2009.
Markets will be in positive territory by year-end, led by small-cap value. This will truly be a year for stock-pickers, and the cheapskates will fare well, taking advantage of the panic and snapping up shares of companies left for dead.
Restaurants and retailers will dominate, beginning in the third quarter. Store closings and bankruptcies will be frequent in the first half of the year, but by the second half the lack of supply will drive the top lines of those still in business, as consumers begin to open up their wallets. This, of course, assumes that No. 3 occurs:
The recession will end by July. As is typical, we won't know it "officially" until the National Bureau of Economic Research makes this declaration after the fact. Still, this will represent the longest (19 months) and deepest recession since the 1930s.
Market volatility will slow considerably in 2009. The S&P 500, for instance, will end 2008 having closed plus or minus 1% on more than half of the trading days, and plus or minus 2% on more than 30% of trading days. 2009 will not be that exciting ... thankfully.
On the political front, the Obama-Clinton marriage will not be a happy union, and Barack Obama will experience the "what was I thinking" sentiment that some pundits believed would occur. For her part, Hillary will not be happy in the limited (in her mind) albeit extremely challenging role of secretary of state. She will, however, stay on at least through 2009.
Obama's health care reforms will not get very far in 2009, as his focus will be on the plethora of international and domestic economic issues. Despite having the House and Senate firmly in Democratic control, health care reform will take a back seat, at least in 2009.
Global warming legislation will also not get very far in 2009, much to the chagrin of many of Obama's most fervent supporters. Not helping the case will be "low" energy prices.
Gold will top $1,200 per ounce as the recovery becomes apparent and as fallout from economic stimulus, bailouts and other assorted and yet unnamed government-driven schemes to jump-start our economy further devalue the dollar.
Oil will trade between $30 and $60 per barrel during the year, ending at the top of that range. OPEC's attempts to cut production will do little, but a pickup in world economic activity during the latter half of 2009 will send oil back to a more "normal" price.
P.S. Will you be there when Cramer makes his next move?
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Jonathan Heller, CFA, is president of KEJ Financial Advisors, a fee-only financial planning he recently launched. Jon spent 17 years at Bloomberg Financial Markets in various roles, from 1989 until 2005. He ran Bloomberg's Equity Fundamental Research Department from 1994 until 1998, when he assumed responsibility for Bloomberg's Equity Data Research Department. In 2001, he joined Bloomberg's Publishing group as senior markets editor and writer for Bloomberg Personal Finance Magazine, and an associate editor and contributor for Bloomberg Markets Magazine. In 2005, he joined SEI Investments as director of investment communications within SEI's Investment Management Unit.
Jon is also the founder of the Cheap Stocks Web site, a site dedicated to deep-value investing. He has an undergraduate degree from Grove City College and an MBA from Rider University, where he has also served on the adjunct faculty; he is also a CFA charter holder.
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