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The Star of the North Picks the Gems of 2001

Dave Kansas

It's that time of the year when I mimic the list builders like Adam Lashinsky and Byron Wien. I try my best to give predictions that have a decent chance of surprising people with their accuracy. But like most futurologists, I have a murky crystal ball.

Before we delve into this year, let's have a close look at last year's calls. Accountability, after all, is vital to maintaining credibility.

First, the good. I correctly predicted that George W. Bush would beat Al Gore, with the bonus offering that Hillary would take New York. I added Donald Trump as a reform presidential candidate, which was incorrectisimo, but I'm sure he would've polled better than Pat Buchanan did.

I predicted that dot-coms would split into two worlds, with a "small band" of winners and the rest collapsing, folding or merging. If we define "small band" as infinitesimal, then this looks OK. I also forecast a short-selling resurgence, which did, in fact, arrive, though not soon enough for some of the big funds.

As I expected, China and Taiwan had some tense moments, especially given the fracas around the latter's elections. And, as I anticipated, inflation did not rear its ugly head, though it's more an issue than it was 12 months ago. Finally, my call for mobility and wireless to become star themes has come to pass, though not perhaps in as big a way as I had expected.

That's six right (mostly). I also had one tweener. In the sports segment, I correctly nailed Lance Armstrong repeating in the Tour de France, but missed on the Minnesota Vikings in the Super Bowl and England in the Euro 2000.

And I had three real dogs. The NYSE goes all electronic? In my dreams. The stock market did have a record year, at least in the Nasdaq. Only problem is, I thought it was going up, not down. And India is the next hot Internet region? Well, I'm not sure there was any hot Internet region in 2000.

So, without further ado, this year's list of ideas:

1. Technology stocks start a strong upward move late in the first quarter, led by the slumping PC makers. Slowly, investors begin to understand that much of the world still needs to do a lot of tech spending in order to get up to speed in a wired world. When the global recession does not materialize, tech investing starts to build once again. This move, however, remains focused in bigger stocks, leaving the Internet universe to dangle in the chill breeze.

2. Bush drives through his trillion-dollar tax cut, shocking the punditocracy and scaring Wall Street. In fact, not only does he jam it through, he makes the cuts occur sooner than envisioned. Bonds will start to edge lower, with yields heading toward 7% at the long end. The dollar will weaken and cyclical stocks will get a boost as investors digest the surprisingly sweeping tax move. By the end of the year, the economy is definitely back on its feet, but the ballyhooed and forecast surplus gets tougher to find.

3. A seemingly impossible combination of regional war in the Middle East and falling oil prices comes to pass. The fighting remains remarkably contained with small stabs by Syria in an attempt to grab the Golan Heights (but really to bolster Bashar al-Assad's standing in his ailing country) and token moves by Egypt create enough noise for Israel and the Palestinians to battle to a stalemate. A U.N.-brokered resolution (and a U.S. threat to pull all of Egypt's aid) solves the conflict late in the year. Despite all this, the purposely contained nature of the conflict permits oil prices to continue easing. Slower growth and new exploration continues to erode the price of black gold.

4. Global recession fears give way to more steady growth. This steady growth boosts first European and Asian shares. Japan, benefiting from warmer relations in Washington, surprises analysts by starting to turn its economy around, through painful restructuring and the rebound in big tech. The Nikkei nears 20,000 by year's end. But fears of deficits in Japan and the vanishing surplus in Washington make the bond markets a more treacherous place.

5. With bonds proving more dangerous, gold makes a comeback. Sure, it's been in the tankeroo for years, but now is the chance for it to reassert itself. I'll be right about this one of these years.

6. Bill Clinton becomes the next mayor of New York. After making a mint giving speeches, the man grows restless living in Hillary's shadow down in Washington. Plus, the couple wouldn't mind a third home to go with the first two. Republican Rudy Giuliani winces at the turn of events.

7. Expansion of the European Union founders. Germany makes a grab for the European Central Bank chairmanship and is foiled by France. All this occurs despite a resurgent euro and rising stock prices in Western European markets. Britain and France tangle over their role and Germany is thwarted from driving the expansion process to the East all on its own.

8. The North American Free Trade Agreement zone expands to include at least one Latin country and Great Britain. After Tory William Hague upsets Labor's Tony Blair in a spring election, he turns the country squarely toward North America, contributing to the EU rift. This will be a boon for British stocks and whichever Latin country joins NAFTA.

9. The Department of Justice moves away from the Microsoft case. The Wall Street Journal editorial page thrills at the news, but Mister Softee can't put things back together again. The company's stock is noticeably left out of the rebound in tech stocks, ending the year down in the low 40s.

10. The Vikings win the Super Bowl. Hope springs eternal in the Northland. And, perhaps, this win will mark a return to the effectiveness of the Super Bowl indicator That means that despite the rocky start, major indices squeeze out a small gain for the year. Other sports calls: Armstrong gets No. 3 in the Tour de France, England fails to qualify for the World Cup, a small-market team shocks the world by winning the World Series and Europe stuns the U.S. in the Ryder Cup.

Well, there you have it. Let me know what you think or send me your own predictions at dave.kansas@thestreet.com. If I get some good ones, I'll publish your calls early next week.