Financial Samurai Predictions For 2011

Dear Readers,

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!

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. Jaymus (RealizedReturns) says

    I agree about MozRank becoming a standard measure for websites as a tool for valueing and comparing. I’m not so sure google keeping their ranking guarded is such a bad thing. When people can see the rank and reverse engineer / speculate about its workings, they game the system and it becomes those with know-how/resources for SEO that get the highest rankings, not the best content. Google’s continued success relies on delivering quality search results, not having a transparent system for so people can optimize.

    Agree that the interaction between corporate bloggers and personal bloggers is going to start to take off in 2011. I’ve seen a surprising number of examples of this in 2010, such as some of my favorite bloggers ending up being cheap staff writers for national publications.

    • Financial Samurai says

      Just seems ridiculous that Google hasn’t updated their PageRank system in 10 months. I feel bad for those who started their blogs within this time period. It’s not right, and it’s not fair.

      Thankfully, there is competition and MozRank has filled the void. Bloggers are an efficient bunch, and we will support the best system.

      American Express’s GetCurrency.com is a GREAT example of collaboration between corporate and personal. They are a solid firm, I have an AMEX, and am happy to support them.

  2. eemusings says

    Ooooh, agree heartily on all those blogging ones. Also, I will probably scream if I see anymore of those “how to grow your blog” posts. They make me want to punch a baby, DN style.

  3. Daddy Paul says

    Wow I find your predictions pretty good. I think Gold will drop. I’m sure some Obama dirt will ooze out. The market is due for a correction.
    I am not sure about the inflation rate remaining low. Food and energy seem to be rising.

  4. MD says

    Two of these really caught my eye lol! Lifestyle design bloggers and blogs on how to blog. These are both very inspirational sources of content. I just hate the fact that I’m allowing someone to blog about blogging by reading their blog on how to blog (does that make sense?)

  5. Everyday Tips says

    I love those ‘how to grow your blog’ blogs that have a great title, but there is no meat to the post whatsoever.

    I agree on gold, I think the market will close at 12,800 this year. I disagree on both parts on Obama. I don’t think a major scandal will come out, at least not about him. I also don’t think he will be reelected, unless something major changes. (I am partially saying that because I know a ton of people that were huge Obama supporters, and they are incredibly disappointed in him.)

    Love the Google comments….

  6. Jonathan says

    One other company to keep an eye on is Skype. They have had some trouble recently, but are supposed to have a pretty strong IPO in the next year or two.

      • Jonathan says

        I’m pretty sure they haven’t yet. I read a report last week about how they are planning a go at IPO in a year or two. They recently had a major outage that set it back a bit.

        But ya in regards to Google voice putting up decent fight I agree. Skype has a strong paying user base but if Google’s service catches on, they’ll have to switch up a bit. I’m not sure on Google’s numbers.

  7. Investor Junkie says

    “More big personal finance blogs lose their voice and become unrecognizable”

    Hence the reason I created my blog. The getting out of debt IMHO is boring to me. Investing is much more sexy ;-)

  8. Miss T @ Prairie EcoThrifter says

    Awesome post Sam. I particularly liked the one about WordPress updates. Those damn things drive me nuts.

    I am not sure if my blog will ever get big but I enjoy writing it and hearing comments on posts. I thrive on the discussion.

    I also like your comment about blogs getting so big they lose their individuality. I totally agree. I would much rather read a blog where I know who the author is consistently. For example, I used to like Wisebread but now they have so many writers I feel like they have lost their originality.

  9. retirebyforty says

    Another huge post! Everyone is starting off the New Year with big posts. :)
    I’ll keep my eye on these predictions. I think MozRank will become the main ranking tool as well. PageRank is dead.
    I hope you’re correct about the European crisis. It’s time for my international fund (mostly Europe) to make big gains!

  10. Darwin's Money says

    Wow, these are some great and insightful predictions. I’m glad you didn’t try to predict where the S&P500 will close at the end of the year – since it’s anyone’s guess. WP upgrades – hilarious and true. I’m still at 3.0…

  11. Sunil from The Extra Money Blog says

    speaking of a dip in gold, what’s everyone’s long term outlook for gold?

    scenario:

    when people last lost confidence in the dollar and thought Dow was going to hit all time lows and we all will be riding camels, gold was priced around 6 times S&P. if you do the math today, gold appears severely undervalued.

    everyone’s thoughts?

  12. Briana Ford says

    Awesome (and eerily accurate) predictions! I know the gold bubble is going to pop any second. My coworker was just complaining the other day about bloggers blogging about blogging; got a good laugh out of that one.

  13. Barb Friedberg says

    I was all set to be bored and annoyed with another “forecast” article. Color me ‘wrong.” I thought your blogging insights were creative and possible. Your world predictions were also thought provoking. I’ll check back in 2012 to see how you fared. Thanks for the entertainment.

  14. Invest It Wisely says

    I guess every organization eventually hits some sort of a crisis or wall, and needs to adapt. Google might be reaching that point. I think they have done a lot of great things for the web and they are one of my favorite companies, though the PageRank thing is a little lame. Glad to see you promote mozRank!

    You predicted it, now let’s see what happens! :)

    • Financial Samurai says

      I see bloggers STEP UP and fight for themselves by speaking out against the Google Pagerank lack of update and find solutions such as MozRank for themselves like you have done.

      Bloggers, united can make a BIG difference. We can make a movement.

    • Get Happy Life says

      How is mozRank different than PageRank ? And why does someone need an authority to tell how popular your blog is? If your blog gets 50+ comments per post, do you really need someone to tell you that that blog is popular ?

      • Get Happy Life says

        Sam,

        if I was an advertiser, I would examine the blog to see how many comments does it get along with the quality of the content.
        But obviously, articles with a lot of comments on regular basis are more than a sure shot for advertising.
        Really, who would you trust more:
        - a bunch of comments by real people on quality articles
        OR
        - a mysterious number between 0 to 10.

        Oh and one more thing – your CommentLuv plugin does not work properly too. It works like once in 100 times -
        if you don’t believe me, look at all the comments and notice how many have a comment backlink.

        • Financial Samurai says

          Sure, I think a thorough advertiser should spend time going into the sight in detail. Perhaps half an hour of reading articles and noticing details. Some don’t though and just use metrics like MozRank, Alexa etc.

          I know my ComLuv is screwy, but there’s nothing more I can do. I’ve updated everything and re-installed. Looks like it works for you. I may just take it out.

  15. Squirrelers says

    Those are actually some pretty good, believable predictions. Hard to argue in general, though not all will come to fruition.

    I particularly agree on blogs about blogging. Next, maybe we’ll see blogs about setting up blogs about blogging, and the chain will continue. Also, I can see a correction in both gold and U.S. Equities.

    Your world “leader” death predictions got a chuckle out of me. They’re probably top candidates in “dead pools”.

  16. Charlie says

    Great predictions!! The one about WordPress updates is funny. Software upgrades are always a toss up and generally not too beneficial as they’re usually just fixing things that have been broken and not rolling out new better features. I was one of the millions who had the iphone alarm glitch – luckily mine happened on Sunday and worked this morning when I had to go back to work. Gosh I sure hope the market breaks 12000 and soon. I wanted it to break last year but at least we got out of the 10′s.

  17. Get Happy Life says

    I especially agree that more and more Personal Finance lose they facial expression and I find it incredibly true that blogging about blogging is supersaturated already.

    Interesting predictions in whole

  18. Kevin @ Thousandaire.com says

    I love this post just to see how your mind works.

    And I hope you’re wrong about video blogging. I’m planning to have a much stronger video focus in 2011 (although not necessarily “video blogging”, more music videos and actually entertaining stuff).

    • Financial Samurai says

      Thanks. I think you will do well b/c you have entertaining music videos.

      It’s if you start recording a 5 minute monologue on a post where I think it will be very difficult, unless there is an action scene behind you. 2 minutes, OK, 5 minutes, it’s tough. Best to just do a podcast.

  19. Little House says

    I agree with the WordPress updates. I still haven’t updated from 2.8 to 3.0+, but that’s basically out of fear! I hope you’re right about the video blogging, I don’t have the time to watch videos when reading is so much faster (and I agree, sometimes seeing the “host” spoils it for me!)

    As for the rest of the predictions, there are not terribly eccentric, so I’d have to say I agree.

    • Financial Samurai says

      It is funny isn’t it? We have a mental picture of what the host looks like, and if it’s so different from reality, then it could be a downer. I hope you visualize me as the Australian version of Shaquille O’Neal!

  20. SPENDaholic says

    Sam,

    Love the predictions. I’m an optimist like you and hope to see unemployment recover to a degree, though I wouldn’t mind it if housing continued to plummet. I think Gold and Silver will break new records in 2011. Will be interesting to pull this comment back out in a year’s time.

    You spoke of bloggers losing their voice – I sincerely hope that doesn’t happen here. With all the networks and crappy PF sites out there, this is one of the few good ones that I visit daily.

    • Financial Samurai says

      Don’t think the housing market will con’t plummeting, as it hasn’t been plummeting for over 12 months now and is inching its way back up.

      It’s all about owning REAL ASSETS in a potential inflationary environment! Thanks for visiting!

  21. Aloysa says

    Lovely. Blogging – totally agree. Some of the blogs become like newspaper. Some of the blogs lose their voice. I hope MozRank gets all the power because my PR is O. Politics – I do think that Republicans will act exactly how you said. I think a scandal might be related to Republicans and not Obama administration. Just a gut feeling. Maybe it will be another bathroom encounter with a wide stance. LOL

  22. Patrick says

    @Sunil from The Extra Money Blog

    I think gold is extremely over priced at the moment and is due for a major correction. Fear is the only reason for the price of gold to rise, and once fear leaves the market and all the stupid commercials about investing in gold stop I could see a price drop of at least 40%/

  23. MortgagesByMark says

    Great post! I can’t say I agree with you on the economy though. There’s still a lot of problems out there that haven’t been resolved yet. If we manage to get through 2011 without a blowup, then maybe that just means the blowup will happen in 2012. We still have a lot of bad mortgage loans on the books of banks and the government is buried in debt and digging deeper. A day of reckoning has to come eventually.

  24. Kay Lynn @ Bucksome Boomer says

    I agree with you on most of these predictions. I think gold will drop more than predicted and the Dow will be higher. I hope there will not be an Obama administration scandal.

    Can’t wait to revisit these at the end of the year.

  25. Graham says

    Some bold predictions in there and I think the economy predictions are going to be close. The relationship the Greenback gaining strength and Europe losing influence in 2011 is an interesting implication. I’m looking forward to observing how this develops throughout the year.

    I doubt the google juggernaut loses much steam in 2011. Moz has been gaining ground lately and I’m a personal fan, but I don’t think they’ll dethrone google….this year. Great post nonetheless!

  26. Chris Parsons says

    I posted a list of predictions for 2011 as well. While I do believe that Gold is a bubble, I don’t see anything that will make it pop in 2011. I don’t expect much to change as far as inflation, housing, or unemployment. I think stocks will continue to go up in 2011, reaching a high point sometime in the 2nd half of the year. And I don’t think we’ll see them get that high again for another 10 years.

  27. The Biz of Life says

    I published my own predictions a number of weeks ago. I don’t see much hope for unemployment improving. The government has spent the past two years providing disincentives to hire. The true unemployment rate is 17%. Even if companies start hiring there is a big pool of discouraged people just waiting to start looking for jobs again. The Euro debt crisis is not over, and this will help the dollar. The bond vigilantes will raise the 10-year treasury rates to between 4 and 5%. The financial sector and commercial real estate will come back stronger than people expect, while residential real estate resumes its historical growth trend in line with the inflation rate. Bank of America will be one of the star stocks, rising close over 50% for the year, no matter what wikileaks divulges.

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