Financial Samurai 2011 Predictions Review

On January 2, 2011 I came up with the below predictions for 2011.  The idea behind making predictions is to test the mind and exercise some logic.  It’s important that everyone have some sort of opinion on politics, economics, and the markets to make informed decisions.  With predictions, you can then asset allocate, invest, and focus accordingly.

2011 has been a trying year by any measure.  We didn’t go to the depths of despair like we did in 2008, but we really didn’t have any sort of euphoria either.  The year felt as if we were running in place, making little-to-no progress on any front.

Let’s go through the predictions and see what happened shall we?

PREDICTIONS 2011 RECAP

BLOGOSPHERE / 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.

Reflection: I can’t think of any collaborative social giving networks that have sprouted up.  In fact, Love Drop just gave its last donation recently, partly because one of the co-founders found a great job in Southern California, and partly because giving takes a lot of time and effort!  For 2012, we’ll be launching the Yakezie Writing Contest in 2Q and 4Q, and leave 1Q and 3Q for new Yakezie Members and their Member Posts.

* 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.

Reflection: I’ve seen numerous lifestyle designers give up and *gulp* get a job given earning a living from freelancing and blogging isn’t as easy as it seems.  It’s sad to see Jacob from Early Retirement Extreme retire from retirement and get a job as a quant analyst.  That said, it’s hard to live comfortably off only $8,000 a year, even if you do have a working spouse.  I’m glad Jacob is putting his PhD to good use!  Good luck mate!  Just read that Erica from entrepreneur site Erica.biz also found a job in Texas, partly so she can get a W2 to qualify for a mortgage.  Congrats!  There are many more examples from much smaller sites.

* 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.

Reflection: Every single advertiser I know recognizes mozRank as a legitamate and more efficient ranking system than Google Pagerank.  I’d like to think it’s part of the movement the Yakezie Network created earlier this year to publicize a PR alternative given PR hadn’t updated in 10 months at the time.

* 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.

Reflection: If you haven’t figured it out by now, a lot of the largest personal finance blogs are owned by larger, publicly traded companies like Quinstreet.  I congratulate all bloggers who’ve sold their sites.  I just hope that some of the blogs continue to maintain the voice we’ve learned to know and love.  How do you talk about frugality and clipping coupons as legitimately now that you’re a multi-millionaire, but your readers are still just chugging along?  You don’t, and hire staff writers.  It’s hard to keep up the momentum after you’ve cashed out, so I understand if not.

* 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.

Reflection: I think there were more than six WP updates as we’re now on version 3.3.  Supposedly each update has served to make WP more efficient and safe.  Thankfully, FS or Yakezie.com has not crashed yet due to an update.

* 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.

Reflection: There are tons of blogs that blog about blogging and how to make money blogging.  Yakezie.com has plenty of articles on blogging given we are a network of personal finance and lifestyle bloggers.  We haven’t sold a Yakezie blogging product on blogging yet, but maybe we will.  I’d love to use the proceeds to donate to charity or support the Yakezie Writing Contest.

* 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.

Reflection: Video blogging has not taken off because frankly, people have realized they aren’t that good looking, and aren’t that eloquent.  It’s just a fact of life that only about 5% of the population is attractive, and that 5% is probably not blogging for a living or a hobby.  The bloggers who do video blogging probably think they are more handsome or prettier than they really are.  Power to them.

* 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.

Reflection: Prince Alwaleed’s $300 million investment in Twitter for a 3% stake now values Twitter at $9-10 billion.  Pandora and Zynga actually IPOed, and some say Facebook is now valued at $100 billion.  You still hesitant on coming to the SF Bay Area?  Money is raining from the sky!

* 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.

Reflection: I’ve had numerous contact with corporate blogs and corporations in general who are trying to figure out how to collaborate with personal bloggers and the Yakezie Network.  It’s still something to figure out given the rigidity of corporations on what they can say, and the freedom of what personal bloggers can say.  What I am pleased with is the increased business collaboration with the Yakezie Network on larger PR, SEO, and media companies. 

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.

Reflection: US unemployment’s latest reading is 8.6%.  Things are humming along fine.

* Gold prices rise by 10% to the $1,400 range as the economy remains sluggish and monetary stimulus continues.  Gold 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.

Refection: Gold prices rise by more than 25% as the dollar continues to remain weak, and the global markets remain volatile.

* 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.

Reflection: The Dow Jones did correct by 500 points this summer and is up about 5%.  Bingo.

* 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.

Reflection: Inflation is non-existent and the 10-year yield drops to 1.75%! 

* 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.

Reflection: There is no bank more hated on than BoA in 2011.  BoA has had a PR nightmare and even assailed bloggers such as Henry Blodget for dipping below $7.  It’s now hovering around $5 a share.  There are some great posts all over the web discussing how bad BoA’s service is.  Why do you treat me so bad Bank of America?

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.

Reflection: President Obama is as clean as a whistle, except for the fact that he’s still doing nothing about Congressional insider trading and not showing strong leadership to get bills passed to help the American people!

* 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.

Reflection: Wrong like Donkey Kong.  The European Crisis has paralyzed the world for at least half a year.  I’m getting sick and tired of it, and so are others.  Expect the EU Crisis to be on the backburner for 2012.

* 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.

Reflection: It is unknown whether Fidel is still alive, given the prominence of his brother, and Fidel’s dark silence.  Dear Leader is no longer around, and his son Kim Jung Un has assumed power as of December, 2011.

So how’d I do?  Any of your predictions go horrible wrong or terrifically right?  Would you like me to make more predictions for 2012, or keep them to myself? 

Photo: Windmills of Mykonos, 2011.  Sam.

Regards,

Sam – “Slicing Through Money’s Mysteries”

Sam started Financial Samurai in 2009 during the depths of the financial crisis as a way to make sense of chaos. After 13 years working on Wall Street, Sam decided to retire in 2012 to utilize everything he learned in business school to focus on online entrepreneurship.

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Comments

  1. says

    Wow… This is an impressive track record Sam! At this time of year I always read so many predictions that I never remember who said what (which is what most of them are probably hoping for). Given this degree of accuracy, I can’t wait to check out next year’s predictions. I might even pen a few of my own for posterity’s sake. I’d like to see you include some specific Yakezie predictions for the New Year!

  2. says

    Excellent job! Can I borrow your crystal ball? I recognize that I have very little ability in making predictions. I definitely like to see more! What do you think is your accuracy percentage?

  3. Robert @ The College Investor says

    Wow nice job hitting so many predictions, especially in the news area. Looking forward to your 2012 predictions.

  4. Untemplater says

    Wow you had a lot of predictions and you did really well with almost all of them. I didn’t anticipate such a big reaction in North Korea to Kim Jong-il’s death. I had no idea he was that highly regarded. Some of the women were in such grief it was like they lost their own child. I didn’t realize about Love Drop and Erica.biz. I think Yakezie will continue strong into 2012. Happy New Year!

  5. mike says

    I love your blog!

    3 observations about your predictions:

    1. GRS-Get Rich Slowly is a blog I used to follow religiously. It’s definitely lost its zest.
    2. Video blogging–I just made a video on you tube about Tankless Water Heaters. Trust me people, I’m really not that ugly or that stupid.
    3. Fidel Castro–Haven’t thought of him lately but you make a great point.

    Keep it up Sam, I always look forward to reading you.

  6. says

    “President Obama is as clean as a whistle, except for”

    Except for the Gunwalker scandal that should, by all rights, be blasted across every news outlet. It’s like Watergate, only with actual victims, and American law-enforcement dying, and continuing lies from the Attorney General, and our government deliberately & illegally feeding guns to Mexican cartels.

  7. says

    I honestly can’t believe that some of these were predictions you made a year ago! You nailed a bunch of them, especially in the economy and markets section.

    I’d love to see more for 2012! Fun to read them!

  8. says

    An interesting list across many areas of the economy. Awesome. Do you see the trend continuing with blogs about blogging in 2012? I already feel saturated on that front….

    • says

      Trying to keep things diverse. I don’t think so on blogs about blogging to make money. People will certainly try, and many more will certainly fork over their $99 for an infoproducts deal instead of just doing.

      I feel bad for people who keep buying make money online products and fail.

  9. says

    Sam I did things a bit differently. I decided to quit my dance career because of age, travel time, and overall finances. I made a good life doing it but started to take a turn in 2005 to slowly get out. I got married in 08 and in 11 I have 2 kids. One of my biggest goals in life was to be a great and active dad, however, I couldn’t do that while traveling the world every weekend dancing around half naked women. Trust me I did that enough times that I didn’t care about it anymore. Anyway, fast forward to my growing photography/videography career that has been growing but is a lifestyle that I can’t say has made me want to reitre. It’s a great side business as of now but I am hoping to change that in 12. If I can’t I can always write an ebook on the 1000 people who blog about making money blogging. :)

  10. says

    I am shocked about your prediction re: Kim Jong-Il. Wow! If only you could predict market like that! I bet you wouldn’t be blogging then, huh? LOL Looking forward (eventhough I am somewhat scared) to hear your 2012 predictions.

  11. says

    Pretty accurate predictions Sam, I don’t normally do the prediction thing but I have a lot of personal goals that I need to organise.

    I had a great year life wise and a crazy one too! I’m still kind of attached to the Egyptian revolution and to think it started 11 months ago is a weird thought to me!

    I’m off to New Zealand in January so can’t wait for that.

  12. says

    It’s not too surprising that the most popular blogs will resemble the old media. Most people just want daily entertainment and don’t really care if it adds value to their lives. And since a lot of people are deep in debt, the “7 ways to repay your debt faster” blogs will always be the most popular kind. The other big category seems to be the bloggers who got exceptional results and now have a big fan club that has no chance of ever coming close to them.

    There aren’t any new concepts in personal finance and I’m looking for ways to really build wealth, not just lower my interest rate. I’ve stopped reading all of those blogs long ago and only stick with a few like this one since you do a great job making us think about things we may have forgotten or overlooked. The blogs I like and their audience will always be a minority.

    It might be a good thing that you aren’t too open with personal details since the best bloggers (with a bit of luck) can rapidly outpace their audience. Even while excluding the common debt repayment audience, you can keep a pretty wide audience even if you are the next Pat Flynn or Ramit Sethi.

    Keep up the great predictions and blogging next year! Maybe you can lure the twitter/fb investors to put some capital into Yakezie and then sell an information product about how to become a star financial blogger and sell out to quinstreet :) (bonus points if you inflate results and the product promises that people who buy it will be more successful than you actually are)

  13. Darwin's Money says

    Wow, love those predictions, especially the videoblogging flop (totally agree!), blogs losing voice due to staff writers, etc. Totally true.

    Unemployment – I have to disagree that things are humming along fine; over 46 Million Americans are on food stamps. That is horrific. The only reason the unemployment rate keeps dropping is because the denominator is dropping as people stop looking for work, not because the numerator is growing quickly enough. outside small pockets of hot job markets, the US is a mess.

    Markets – nice call on gold. Dow is actually down on the year I believe, but close enough! Getting it within 5% each year is probably better than half the Wall Street analysts.

    And nailing Kim Jong-Il? prolific! Who’s in store to leave us in 2012? (hopefully nobody we know in the blogosphere!)

  14. Marissa says

    Wow, you were dead on. Its great to see the transition from PR to moz rank. Im also glad to see that vlogging hasn’t taken off. I rather read my updates and since most of my blog reading is don’t at work, videos aren’t the best option.

    Looking forward to seeing next year’s predictions.

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