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10 Calls For 2014: Markets, Economy, Politics

Stocks in this article: WEN DRI YUM

NEW YORK (TheStreet) -- For the past several years, I've somewhat begrudgingly published a year-end prediction column, first for the Street's Realmoney.com, and now for TheStreet.com. I am the first to admit that I don't exactly like writing these types of pieces, yet find myself compelled to do so. Take all of these prognostications with a grain of salt. It's tough enough to predict next week, let alone next year.

I'll be happy if even half of the following predictions come true. Even Ted Williams never hit more than a .406 batting average during a full season, and that was in 1941.

The Markets

  1. It should be a big year in the broad US markets for 2014. None of these typical 4% to 6% growth predictions that you hear from many prognosticators after a huge run-up or big decline. I see a 15% to 20% change in the S&P 500 in 2014. What I'm not sure about is whether that will be up or down. A volatile year, either up or down -- that's the best I can predict.

  2. Interest rates will rise during the year, with the 10-year note ending in excess of 4%. There's only so much the Federal Reserve can do to hold rates down, and they've done it all. The taper has already started and rates are ticking up. After years of Fed "funny money," rates should rise more.

  3. Restaurant stocks will have a rough go of it in 2014. Of course, I said that last year and struck out. The valuations have gotten out of whack, though. A group of 39 restaurant stocks I follow is trading at about 36 times trailing earnings, and more than four times book value. This group was up 57% last year, and has averaged 46% for the past five years. Wendy's (WEN), which I owned previously, has come a long way. But it is not worth 30 times 2014 consensus estimates. Darden (DRI) may be interesting as a special situation. That will be especially true if activists' calls for it to break into pieces -- including forming a REIT from the company's vast real estate holdings -- come to fruition.

    WEN ChartWEN data by YCharts

  4. Precious metals will rebound in 2013, as will mining stocks. Inflation is far from dead, no matter what some talking heads are saying. Sooner or later, it will rear its ugly head. In some areas it already has. Gold and silver are still good hedges against both inflation and uncertainty. We'll have plenty of both in our future

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