A friend once told us: Whatever you do – don’t make predictions about the future. You are most likely to be wrong.
Looking back on our 2013 predictions we got 50% of them right and 50% of them wrong. While there is room for improvement we can live with that outcome. However our individual posts have been very profitable for readers who have paid attention to them!
The Japanese Market was one of the worlds best performing markets and the yen weakened in 2013. Our profile on Private Equity players was sound too and companies like Lazard, KKR, Blackstone and Apollo soared in 2013 (see original post here). On the equity market in general we were clearly too cautious- predicting the market in the US would barely move last year. Instead the market soared almost 30% and reached a new all time high in 2013.
In case your wondering: Yes we retain large short positions in the US market. While we sold some at losses to offset capital gains elsewhere last year, we have already increased our short positions once again.
So what about 2014?
We think a major correction is coming. We remain cautious. We think investors are too complacent. While we remain negative on worldwide equity markets in general there are sections of the market that will do well. 2014 will clearly be a stock pickers market. Here are our predictions for 2014.
- We think shares of BP will continue to outperform the FTSE 100 for 2014.
- REITS have underperformed in 2013, but shares of Vornado Reality Trust will outperform the S&P 500 this year.
- Technology companies will continue to benefit from increased spending and Network Appliances will outperform the S&P 500 this year.
- Drastically under performing in 2013 (a prediction we got wrong) Banque Edmond De Rothschild will outperform the SPI Index in 2014.
- Although Emerging markets will not perform well in 2014 we think shares of Teva will outperform the S&P 500 as the company restructures.
- Shares of Starbucks will under perform the market (S&P 500) this year as consumer discretionary spending remains uncertain.
- Emerging markets (EEM) although inexpensive will continue to underperform the S&P 500 this year.
- Despite a fantastic performance in 2013 Lloyds Bank will have another positive year in 2014.
- Although we are positive on Luxury long term, we think Richemont SA will under perform the SMI.
- Having lost money for three years in a row-we think Nintendo will finally turn a profit in 2014.
