Predictions for 2008

Desi · Post by **Desi** » Wed Feb 13, 2008 4:17 am

Today Feb 12th, the markets closed as follows:

Dow - 12372
SP500 - 1349
Nasdaq - 2320
QQQQ - 43.95

Fed Funds rate = 3%

10 year treasury yield at 3.66%
30 year treasury yield at 4.46% (normal yield curve is back).

CPI- U at 210 (December 2007 figures) indicating an inflation rate of 4.08%

Gold ETF GLD closed at 89.30

The tax plan from Bush is pumping new money in the hands of individuals and businsesses to spur spending.
The Bernanke rate reductions are going to provide reprieve to the beleagured housing market.
Foreclosure freezes and other regulatory measures may stem the tide of foreclosures.
Lower interest rates provide reprieve to some defaulting sub prime borrowers.
I see a high liquidity (even though some of the bond market has dried up) - will this create further inflation?

What are your predictions for the year 2008?

How do you see the above numbers on Dec 31 close 2008?

b2b · Post by **b2b** » Wed Feb 13, 2008 4:42 am

desi.....we would be keen on what are your own predictions and views on this....

SubtleFriend · Post by **SubtleFriend** » Wed Feb 13, 2008 7:21 pm

Desi, what is the reason for this survey? How do you propose to use this information?

Desi · Post by **Desi** » Wed Feb 13, 2008 7:33 pm

SubtleFriend;80859Desi, what is the reason for this survey? How do you propose to use this information?[/quote]

This is not a formal survey or a poll. It is a discussion thread to hear different viewpoints of members of what members feel. The purpose is that we learn from views of one another.

My personal purpose is learning and it is just a thread like any other and I hope to learn from different viewpoints on what members think about economy and where it is headed.

Example, X may feel that recession is in the wings, more foreclosures to come, more housing and finance company bankruptcies.

Member Y may feel, a lot of liquidity will drive up demand, nix any downtick in GDP and stoke inflation.

The above two differing view points could start a debate which may allow opportunity to learn some information we may have missed. I am hoping some members will engage in some lively debate and give us an opportunity to learn from their expertise.

R2I_meri_jaan · Post by **R2I_meri_jaan** » Thu Feb 14, 2008 9:06 pm

I think you need to take a historical look at US DOllar Index vs. Gold
Anytime Gold goes up and Dollar goes down (that is dollar is in the bear market) the US stock market goes down.

Its a good time to invest in mining stocks, precious metals ETF etc.
Good idea to invest money in Emerging market MFs.

Though I dont really understand why Emerging Market bourses are so reactionary to US stock market dips. Maybe one of you can find articles or pointers that can explain this phenomenon.

http://biz.yahoo.com/ap/080214/congress_recession_threat.html

insane · Post by **insane** » Thu Feb 14, 2008 9:20 pm

I would think the ground level inflation (not the govt numbers) are 10+% in US and 15+% in India. The amount of new currency introduced into circulation last year was 23% in India and ~16% in US.

Brazil M3 +17.0%
Canada M3 +12.9%
China M2 +18.5%
Euro zone M3 +12.3%
Hong Kong M3 +31.5%
India M3 +21.5%
U.S. M3 +15.8%

I wouldn't be surprised by hyperinflation! During periods of high inflation, commodities and gold would do well. But if the economy stalls, they could lose value very fast.

My predictions for 2008:
1. Atleast one large bank in US will fold (govt may do something, but it won't matter much)
2. Stock market would see a large correction in both India and US, possible before 3rd qtr
3. Gold would continue to increase. If US economy moves from recession to depression, gold would fall very fast
4. Real estate in India will see correction (RBI may cut rates a little, but not much) & consolidation of players
5. Oil would continue to rise
6. Inflation continues to stays high

So what are good investment strategies in a climate of very high inflations? Comments welcome.

Desi · Post by **Desi** » Thu Feb 14, 2008 10:11 pm

flipflop · Post by **flipflop** » Thu Feb 14, 2008 10:26 pm

I don't know what the closing price of GLD will be on Dec 31-2008 , but I am pretty sure that it has peaked. I am on record ( refer the Sensex 25k thread) that I am short GLD with a stop of 92.6 . My target for taking profits is im low 60s.

Sid · Post by **Sid** » Fri Feb 15, 2008 5:10 am

An article in Morningstar predicts DJIA to cross 18500 in next three years. Hard to believe in these volatile times.:rolleyes:

http://news.morningstar.com/articlenet/article.aspx?id=228434&pgid=hparticle

ThorlaPatil · Post by **ThorlaPatil** » Fri Feb 15, 2008 8:01 am

Dec 2008:

Dow - 13600
SP500 - 1475
Nasdaq - 2627
QQQQ - 49.79

Fed Funds rate = 2- 2.25%

10 year treasury yield at 3.2%
30 year treasury yield at 4.1% (normal yield curve is back).

Inflation rate of 4.5%

Gold- 75

Hyperinflation to follow in coming years. Acquiring debt this year may work out well.

-tp