7 Predictions For 2012

Many bloggers are posting predictions for 2012, so I thought I’d throw my hat in the ring.  Hopefully I’ll remember at the end of the year that I did this and will take the opportunity to look back and see how I did.

  1. President Obama will be re-elected – I don’t think Obama has done a great job while in office.  He ran in 2008 on a campaign of ‘change’ and began a ‘business as usual’ approach the first day he stepped into the Oval Office.  Regardless, the economy has improved, unemployment has gone down, and the Republican party is anything but united, which in my mind will add up to a second term for Obama.
  2. The tide will begin to turn on strategic defaults and underwater mortgages – Last I saw, roughly 22% of mortgages were underwater, and many of those homeowners have continued to choose to give their homes back to the bank.  I see both of these numbers slowing down for a couple of reasons.  First, I think the real estate market has finished it’s free fall.  Prices may not go up for awhile, but a stabilization in prices will take some of the fear of the unknown away.  Second, people that are paying their mortgages are gaining traction.  Simply put, if people make their payments while the value of their home remains stable, they will start getting closer to positive equity.  For those who have stuck with their homes for the last few years, this glimmer of a light at the end of the tunnel will reduce the temptation to ‘walk away’.  Third, low interest rates and an easing of the HARP program will make re-financing a continued option that can allow homeowners to more pay less interest.  Personally, I wish that one stipulation would have been (for those who have not suffered income loss) that in order to take part in this, you had to re-finance such that your monthly payment remained roughly the same, meaning that you would merely shift payment from interest to principle, thus providing more infusion of equity into the housing market.
  3. The Eurozone crisis will not go away but will get less attention – The financial crisis of the Eurozone created an enormous amount of volatility in the stock markets in 2011.  Positive news one day would send markets soaring 3%, only to have that entire gain wiped out the next day when negative news came back to the forefront.  This happened over and over again. I don’t expect the news to change much, meaning that we won’t see a ‘solution’ but we also won’t see any catastrophes, but even though things won’t change, I expect investors to start tuning out the news a little bit, reducing some of the market swings that have been tied to Europe.
  4. Blackberry will be history (or at least RIM will be) – Blackberry was once the darling of the smart phone industry.  You didn’t have a smart phone unless you had one.  Now, they’ve been passed by and many owners (myself included) are merely counting the time until they can upgrade (six months and two weeks!).  I expect that Research In Motion will either sell out or declare bankruptcy.  Carriers will continue support for legacy products and new devices could even roll out if another company purchased them, but I expect that RIM is done by the end of the year.
  5. Apple will either provide a dividend or make a giant, unexpected purchase – Apple is sitting on nearly a hundred billion dollars in cash.  Something has to give.  I expect that they would either start answering to investor pressure to release a dividend, but I have a feeling that they could shock the world with a purchase of a company or technology that nobody sees coming.  I have no speculation on what that might be (and no, RIM wouldn’t count!) but I have a hunch they want to show the world that they plan on continuing to make headlines even after the passing of Steve Jobs.
  6. Unemployment will continue to dip, the economy will continue to improve, the bottom line of businesses will get better, but consumer spending will lag – That’s a lot rolled into one, but I think the first three tie together.  What may surprise out of all that would be the consumer spending element.  Maybe I’m being too optimistic, but I see consumers taking the opportunity to de-leverage (pay down debt) as part of a way to apply the extra income that would result from the other items mentioned (namely the reduction in unemployment).  While not everybody will follow the model, there are enough people who have gotten into debt either because of foolishness (taking advantage of easy credit and getting in over their heads) or necessity (having to charge expenses just to put food on the table), and people will take advantage of an improved opportunity to get out from under the burden of that debt as well as take measures to ensure that it doesn’t happen again so much that consumer spending will not rise as fast as other key indicators.
  7. Discovery will pull the plug on Oprah – Oprah has tried to do something that no other person ever has, make an entire TV network work on the back on her brand name.  It hasn’t worked so far and despite a committment by her to get more involved, I feel it will be too little too late, and the OWN network will be bid adieu by the end of the year.

What do you think of the predictions above?  How would these predictions impact you?  What are your predictions for the rest of 2012?

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13 thoughts on “7 Predictions For 2012

  1. Interesting predictions beagle – I agree with most of them. I dont think we will change presidents, though I do suspect that the senate will change hands. Never even thought about what oprah was doing, but im curious to see if you’re right. You forgot to put “michigan state wins big 10” basketball tourney in there.

    • LOL! My wife enjoys Oprah but thankfully doesn’t spend any time at all on the network (though it sounds like Oprah really doesn’t either) so we’re actually OK on that front 🙂

    • Good possibility there though when companies let their stock prices get to those big numbers to begin with, you have to figure it’s probably not too high on the priority list.

  2. Intersting predictions, MB. I have to say, with respect to your first prediction, I agree that we’re headed for a re-election of the incumbent. We’ll see what shapes up in the next few months, but it looks like it’s headed that way as of now anyway.

    Also, I tend to agree on the Eurozone crisis getting less attention. We may be way wrong on this, but history tends to show that bad news gets forgotten. How much do people talk about the U.S. credit downgrade these days, for example? Not much compared to how disturbed many seemed to be at the time it happened.

    • Very true. The stock market tanked the morning after it happened and then people forgot all about it. I suppose if other agencies decide to downgrade the USA, it’ll come back up to the forefront again.

  3. I agree with most of your predictions. Apple will likely start paying a dividend, that seems to be the most logical thing to do with their excess capital. I think RIM is a likely takeover candidate, but there’s no way they go bankrupt (with over $1B in cash in the balance sheet), not this year anyway 😉

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