Financial Samurai Predictions For 2011
Happy New Year! 2011 will be solid because the world continues to recover from the economic violence experienced just two years ago. Confidence builds as people are no longer afraid of a double dip recession. As a result, people start taking risks and magic happens.
Making predictions is fun because I enjoy looking back at what I was thinking 6 months or a year from now. It’s important to analyze where you think the world will be in the near future. With a proper framework, you can then strategize on how to achieve your goals and implement procedures accordingly. Of course, your predictions can be entirely wrong, but that’s also part of the point – to think long and hard about the state of affairs.
My mind is quite calm right now as I optimistically look into the future. Without further ado, I present to you my predictions for 2011!
PREDICTIONS FOR 2011
BLOGGING / INTERNET
* Social giving networks such as Yakezie.com start popping up all over the web. People want to be a part of something bigger that also does good. Sometimes it’s hard to feel like your donations make a difference. Through a social giving network such as Yakezie.com, your combined donations become big donations which go directly to the recipients, rather than through various levels of bureaucracy where the end recipient only gets a fraction of the original amount. Yakezie.com is unique because you can participate in the process by commenting, voting, and creating campaigns for your favorite applicants. Furthermore, you will join a thriving network that will help you jump-start your own goals. I hope other blogging networks surpass Yakezie.com so that even more deserving recipients can benefit.
* The lifestyle design movement takes a breather as the economic recovery allows more people back into the work force. Not only are people let back in, people get more opportunities to choose what they really want to do and are happier. Remember, nobody quits a job they love. It’s hard making a decent living as a lifestyler while saving for retirement and supporting a family, hence many who hopped on during the downturn give up. Ironically, thanks to the recovery, advertisement revenue in the personal finance space grows, allowing for more personal finance bloggers to go full-time.
* MozRank (see websitegrader.com) becomes a standard ranking system for the best blogs on the web as Google Pagerank no longer bothers to update or provide transparency. Google’s stock loses investors money in 2011 as it becomes too arrogant and too big for its own good. Google cannot stem mass departures to the likes of Facebook and Twitter. The brightest graduates no longer want to work for a stodgy corporation where they are surrounded by uninspired millionaires.
* More big personal finance blogs lose their voice and become unrecognizable because the main blogger no longer writes a majority of the content. The blog loses its personal feel and turns into a newspaper which loses the most ardent fans, but gains even more new subscribers. It’s a sad trend for original fans, but one that is done out of business. The trickiest situation is for those PF bloggers who started off years ago in debt and with a modest income and are now making way more than ever before. How does the blogger continue to write about debt and saving money when s/he doesn’t need to anymore? How does the blogger not look like an impostor to his or her readers who may still be struggling financially? The solution is hiring staff writers and focusing on non-financial goals such health.
* There will be six WordPress updates which will do absolutely nothing for your blog. In fact, one update will certainly mess up at least one of your plug-ins and cause you a big headache. You’ll also have some uncontrollable urge to continue to tweak your blog’s design until it also breaks.
* There’s a disproportionate increase in blogs that blog about blogging and how to make money blogging. Again, the economic recovery leads to more advertisement revenue opportunity and the blogging world continues to grow. Although, after the 1,000th post or eBook on how to make money blogging, the market gets over-saturated. I can save you some time and money. Just get to know supportive people and write good content.
* Video blogging backfires. We’re used to seeing professional actors, announcers, and newscasters perform on TV. Hence, unless we are incredibly attractive and talented, the audience will find the video too boring, and too slow and switch off. We’d like to think we are sexy good presenters, but the reality of it is, we aren’t. But then again, if you are, you are going to milk your looks as much as possible in your Twitter, Facebook, and blog profiles and it works! Focus on podcasts and work on your speaking voice.
* Twitter’s valuation doubles from $3 billion to $6 billion. Despite Twitter not being profitable, internet fever is back. Facebook’s valuation grows from $45 billion to $60 billion and then decides to go public. Unfortunately for the investing public, they are getting very late into the game and are buying at internet bubble valuations that rely only on the greater fool theory. Pandora is one of the best internet companies to either go public or get acquired in 2011.
* Increased collaboration between corporate blogs and personal bloggers. As blogging goes mainstream, corporations realize the power of individual blogs and the writers behind them. As a result, more personal bloggers get recruited to do lucrative freelance work for bigger websites. Corporations get that they need to introduce a personal element to their sites with individual authority figures to add color and credence. The use of Twitter overshadows Facebook in terms of spreading corporate messages. As a result, those who not only have a blog, but a relatively large Twitter following will get the most amount of opportunities.
ECONOMY & MARKETS
* US unemployment drops to under 8.8% from 9.8% currently as cash-rich corporations with severely stretched employees start hiring again. There is a massive war for talent in the 1st half of the year as CEOs are overly optimistic about the trajectory of the recovery. All I see is 2.5-3% GDP for the year. That said, unemployment will surprise on the upside for the better. The government will continue to roll out incentives to encourage corporations and small businesses to hire.
* Gold prices rise by 10% to the $1,400 range as the economy remains sluggish and monetary stimulus continues. Gold could be a viable long term investment so long as our government and our Federal Reserve keeps printing money. Real assets are what should continue to do well as everything is relative.
* The Dow Jones corrects by 500 points at some point in the year, but still ends the year up a lousy 5% to close at 12,180. Besides the correction in the Dow, 2011 will be relatively uneventful floating evenly between negative and positive territory.
* Inflation remains very tame and the 10-year yield does not breach 4% as a result. The economic recovery isn’t strong enough to narrow the output gap efficiently to cause inflation to breach 3.5%. If the 10-year yield gets to 4%, investors will pile into Treasuries in a hurry and drive rates back down. Let cheap money reign all year.
* Bank of America becomes the most assailed bank in the world thanks to information released by Wikileaks. It’s unfortunate because there are many good people at the organization, but the e-mails that come out of BoA via Wikileaks outrage the public so much that money pours out. Perhaps it’s just natural payback when they stood me up for a mortgage refinance and failed to apologize in 2010 so I took my business elsewhere.
POLITICS & WORLD AFFAIRS
* There is a big scandal in the Obama administration that becomes a national outcry. Republicans capitalize on the scandal and beat their chests loudly by taking credit for the economic recovery, even though they just came to power in the House and haven’t done much of anything at all. Pundits start predicting a 2012 Republican President, but I doubt that will happen since unemployment continues to improve, and President Obama should get all the credit.
* Nobody cares about the European debt crisis anymore as Latin America has a blow up. For all the political jockeying Germany has done about threatening to pull out of the Euro if their neighbors don’t implement austerity measures, Germany ends up bailing everybody out and staying. Although Europe stops being a menace to world financial markets, global investors reduce their holdings in European equities and reallocate to Emerging Markets where balance sheets are strong and growth is much faster.
* The world loses both Fidel Castro and Kim Jong-Il. Neither Cuba or North Korea benefit from more foreign aid and improved trade relations because their offsprings continue to follow the ways of their fathers.
TO A BRIGHTER TOMORROW
I’m excited to see what 2011 brings us. A large part of me wishes that everything will be as calm as predicted. Then again, a part of me wants to see more excitement and volatility in the world. Volatility is what makes us do crazy things and seize crazy opportunities. Let’s hope there some positive mixture of both!
See my Predictions for 2013!
Sam – “Slicing Through Money’s Mysteries”