11 Bold Predictions for the Year Ahead

Chile, Brazil, Peru, Mexico and Argentina become more widely recognized for their improved domestic economies, strong commodity exports and safe havens for tourism. Despite bears' projections of major trouble because of high consumer and corporate debt and income disparities, their stock markets surge to new highs by the end of the year.

I'll monitor these projected surprises throughout 2004, and let you know whether Santa's gift of future-sight was crystal or cloudy.

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Oh, and one other thing. Last year's forecast at this time from Mr. P, an anonymous hedge fund manager who provides us with guidance from time to time, was pretty accurate.

Here's his outlook for 2004:

I believe the market is fully priced and that returns going forward will be dull, with low volatility, in the 5% to 8% range. Current low volatility implies unrealistic expectation of a low-risk geopolitical environment. Returns for investors will come from buying selloffs during periodic high-volatility events associated with terrorism risk, large European bankruptcies and big moves in currencies and commodities. The trend will be flat to up, however, as the Fed will continue to provide liquidity through low interest rates. In the fall, if it appears that Bush will achieve a supermajority in Congress to pass his political, financial and social agenda, then the market will be primed to soar in the fourth quarter and in 2005.

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