This blog post originally appeared on RealMoney Silver on Nov. 23 at 7:45 a.m. EST.
As always, hanging out with Melissa, Karen and the boys on "Fast Money" was awesome.
Melissa started by asking for my market view and then for a peek at some of my surprises for 2011.
I remain less certain than most that the domestic economic recovery is headed on a smooth path toward profitable and self-sustaining growth -- conditions that seem to be needed in order to ratify the market's rally since late August. As I
a couple weeks ago on "Fast Money," the market has likely topped for the year despite the nice rally yesterday from the lows on Monday.
The necessary ingredient to a continued market climb and to the restoration of self-sustaining growth lies in the hands of our fiscal authorities, not our monetary authorities.
Neither Republicans nor Democrats appear to be moving to the center, and gridlock is the likely outcome. Accordingly, we are not going to see the sort of intelligent, transformative and focused fiscal moves directed at job growth that are needed.
Guy Adami asked me for a specific market forecast. How long can it go? No Cassandra, I am respectful of Mr. Market, and I recognize the historic seasonal strength at year-end that could serve to buffer a drop. Mindful that I have been premature in predicting the market's demise, I nevertheless stand by my statement of early November that the
might have peaked for the year.
The next question Melissa asked was for a peek at some of my Surprises for 2011. She noted a
I made a year ago regarding a wide-ranging
investigation into insider trading, which was
this past weekend.
I framed the answer to her question by saying that every year I take a page out of Byron Wien's playbook. (I have been doing this for seven years, and Byron and I enjoy jousting and seeing whose list is ultimately more accurate.) The real purpose of the exercise is to position a portion of one's portfolio for some outlier events or "possible improbables" in order to generate alpha, or excess returns.
Surprise No. 1:
I expect a series of populist initiatives by the current administration beginning by a frontal assault on mutual fund 12b-1 fees. Asset managers such as
T. Rowe Price
Waddell & Reed
are exposed, and I am short all three of them.
Surprise No. 2:
The Internet becomes the tactical nuke of the digital age. Cybercrime likely explodes exponentially as the Web is invaded by hackers. A specific target next year will be the
, and I predict an attack that causes a week-long hiatus in trading and an abrupt slowdown in domestic business activity.
Guy asked whether the May 6 flash crash was "a shot across the bow." I responded that our reliance on the Internet is profound. The May flash crash seemed to have been caused by a confluence of unrelated events, but our markets very much remain vulnerable to Internet attacks and, in the extreme, to terrorist attacks.
With that holiday cheer (hat tip to the Divine Ms. F., Karen Finerman), like Warner Wolf,
Doug Kass is the author of The Edge, a blog on
that features real-time shorting opportunities on the market.
At the time of publication, Kass and/or his funds were short BEN, TROW and WDR, although holdings can change at any time.
Doug Kass is the general partner Seabreeze Partners Long/Short LP and Seabreeze Partners Long/Short Offshore LP. Under no circumstances does this information represent a recommendation to buy, sell or hold any security.