HBPP component predictions for 2016

[bitcoininthevp]

Write in vote: Bitcoin

[Bean]

i am amused to see Kim Kardashian photos have made the list again this year, but i think the market has moved on to bruce/kaylen jenner photos for 2016

I think this is the strongest voting to one particular asset (gold) I have seen in a long time.

[Cortopassi]

Are we smarter than everyone else or sorely mistaken???  Wish I knew!

[Pointedstick]

Are we smarter than everyone else or sorely mistaken???  Wish I knew!

Probably sorely mistaken. I imagine we all feel that gold was beaten down, so now it's its "turn to shine," coupled with what our brains interpret as confirmatory evidence: a strong opening in 2016. Unfortunately, this is probably misleading, and most likely everyone who voted for gold--myself included--will be proven totally wrong!

[Libertarian666]

Are we smarter than everyone else or sorely mistaken???  Wish I knew!

Probably sorely mistaken. I imagine we all feel that gold was beaten down, so now it's its "turn to shine," coupled with what our brains interpret as confirmatory evidence: a strong opening in 2016. Unfortunately, this is probably misleading, and most likely everyone who voted for gold--myself included--will be proven totally wrong!

I don't think so. The fiscal situation of the US is much worse than most people realize, and that will have to blow up sometime, one way or the other. I think this year is as good a time as any for that to happen, but the longer the delay, the bigger the reaction when it finally happens.

[Lang]

Bonds.

I believe inflation will remain subdued and growth mediocre, thus fewer rate hikes than most people expect. This is good for long-term government bonds. The 30 year Treasury yield is currently around 2.95%. I expect the yield to drop to 2.5% before the second half of the year, and consequently the 30 year Treasury will gain ~10%, if not more.

I am very bad at predicting commodity prices, and gold is even harder to predict than oil. But generally I see no reason for gold to have a significant gain in 2016, considering the low inflation environment.

As for stocks, corporate profits have been trending down for more than a year. Wages are starting to pick up and this will create even more pressure on profits. Stocks can still go up if investors are optimistic and believe that this is just a temporary situation, but considering the uncertainties in the global economy (volatility in currencies, volatility in commodities (particularly oil), China slowdown, etc.), it seems unlikely that any investor would remain optimistic for long.

So to sum up, my predictions for 2016 are:
LTTs - more than 10% gain.
Gold - probably no more than 5% gain. Losses are a distinct possibility.
Stocks - probably no more than 5% gain. Losses are a distinct possibility.
Cash - less than 1%.

I don't have a PP, but from the above you can guess what my VP looks like right now.

[Bean]

I am very bad at predicting commodity prices, and gold is even harder to predict than oil. But generally I see no reason for gold to have a significant gain in 2016, considering the low inflation environment.

Gold to me does whatever it wants.  Reason or not.  That very fact makes me wonder if it will go up, just because I see no reason for it to go up other than everything potentially being worse that a lump of shiny rare metal.

[Ad Orientem]

It's worth remembering that even during its near 20 yr bear market, gold had some really good years. I feel a bit like the guy standing in front of a slot machine that hasn't paid off in a while saying "it's due." Of course that analogy also points to the risks.

[sophie]

Are we smarter than everyone else or sorely mistaken???  Wish I knew!

Probably sorely mistaken. I imagine we all feel that gold was beaten down, so now it's its "turn to shine," coupled with what our brains interpret as confirmatory evidence: a strong opening in 2016. Unfortunately, this is probably misleading, and most likely everyone who voted for gold--myself included--will be proven totally wrong!

Almost certainly - and that's been the case for the past couple of years too.

I voted for gold too....

[Cortopassi]

I dipped into VBR (small cap) a little bit today.  Could not help it.  Honestly, if the market is down again tomorrow I will truly be shocked at the loss of control.

We'll see what happens to China with the trading restrictions lifted tonight.

Not a bad place to be the PP for the first 7 days of 2016.  Up about 0.44% overall.

But I always have this feeling in the back of my mind gold is going to get whacked!  Even though it is only a little over $1100.

[dutchtraffic]

Honestly, if the market is down again tomorrow I will truly be shocked at the loss of control.

What do you mean by this..?
Do you mean someone should control the markets? Because that means it's not a market anymore (which is the case right now).
Also, stocks are barely down at all, close enough to all time highs, I don't see the big deal?

[Cortopassi]

Not sure what I mean.  Just since 2009 there has been little ability for a real correction to occur.  Fed this, Fed that.  Fed backstop, Fed put, plunge protection team, etc, etc. 

I think there is plenty of growing concern out there on where things are going this year, and whether there is anything left, true market wise (earnings) or propping up, to stop a major correction.  But I'm sure things will be tried.  What that means?  Talking positives up, more than anything.

[Tom]

My gut says gold, which is precisely whey I'm going to not say gold and go with bonds.  Bonds is what I'm most terrified about tanking - and is therefore most likely to do well.  Things tend to never turn out in the way that would make sense.

[Libertarian666]

It's worth remembering that even during its near 20 yr bear market, gold had some really good years. I feel a bit like the guy standing in front of a slot machine that hasn't paid off in a while saying "it's due." Of course that analogy also points to the risks.

That's not really a good analogy. Slot machines are based on artificially created randomness, which is designed to meet statistical tests. The gold market has actual fundamentals that suggest that the longer the price stays down, the more pressure is built up for an increase in the price.

[Libertarian666]

It's worth remembering that even during its near 20 yr bear market, gold had some really good years. I feel a bit like the guy standing in front of a slot machine that hasn't paid off in a while saying "it's due." Of course that analogy also points to the risks.

That's not really a good analogy. Slot machines are based on artificially created randomness, which is designed to meet statistical tests. The gold market has actual fundamentals that suggest that the longer the price stays down, the more pressure is built up for an increase in the price.

I agree, but the tough part is figuring out whether the current price is "down" or "up."  In other words, how does one determine the intrinsic value of an ounce of gold?  The answer is "nobody can."  So in practical terms, watching the price of gold go up and down will appear quite random.  It certainly has in the past.

Right, it appears random, at least in the short run.

But if you look at it over a long period of time, it is obvious (to me, anyway) that it reflects the debasement of the US dollar pretty well. So unless one expected that to stop, which I don't, the price of gold should continue up over the long term.

[Tom]

So far my pick, which was against my gut, of bonds as the best performing asset is a pretty good one.  They're picking up a lot of slack.  I'm feeling pretty good about the PP right about now, with the S&P down around 7.71% so far this year and the PP slightly up!

It seems that it gains slow and steady and loses slow and steady.  We had a lagging year last year, but it was a little bit at a time and less painful.  Here's to hoping we are headed to steadying back up.

[4x4]

Cash Best Risk Reward HBPP Component in 2016