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[video] Doug Kass: 15 Surprises for 2014 (Part 1)

Surprise No. 3: Stock prices and P/E multiples decline.

While the S&P 500 closed 2013 at its yearly high, equities will close 2014 at their yearly low.

Stocks trade in a relatively narrow range over the next six months but fall in the second half, ending the year at their low, with a decline of between 5% and 15%.

Valuations decline in 2014. Last year's animal spirits subside as P/E multiples, which increased by nearly 25% in 2013, fall by about 15% in 2014.

Strategy: Buy index puts, sell index calls, or purchase inverse ETFs.

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