Financial Samurai 2012 Predictions Recap


Financial Samurai 2012 predictions recap is a Financial Samurai original. I've been writing my predictions and recaps since 2009.

Another year has come and gone. Hopefully, all of you have made strides with your finances and your personal lives. Financial Samurai would be a failure after writing ~250 articles in 2012 if I wasn't able to help you save more money, invest better, take more calculated risks, and take one step closer to achieving financial freedom.

2012 will go down as one of my most defining years because I managed to break free from the corporate world. There's no doubt I would still be taking a 7:15am bus to work if it wasn't for launching this site. It feels exhilarating to start anew!

It's going to be tough to match the accuracy of my 2011 predictions because I was off by only 0.5% with my Dow Jones Index target (+5.5% instead of +5%). North Korea's Kim Jung Il passed away as predicted as well. No, I do not work for the CIA. But, maybe I do. You don't want to know.

I have not revisited my predictions for 2012 until the writing of this post so I'm curious to see what was on my mind one year ago. December 2011 was still a time of disarray, with 8.5% unemployment, tremendous uncertainty in Europe, the Occupy Everything movement, and a US President whose hopes of re-election loomed on a improving economy.

Here's to looking like a Big Donkey or a Small Donkey!

Financial Samurai 2012 Predictions Recap

* Black is from one year ago. Blue is now.

1) President Obama wins a second term.

Political pundits and online betting sites are completely clueless and gutless in their 50/50 predictions. They talk about how the stock market and unemployment needs to do well for Obama to get re-elected. Nothing matter folks!  Republicans have nobody worthy of beating President. Barring an Obama illness, nothing really matters. The economy is improving, unemployment is going lower, and personal balance sheets are strong. If you know anybody who is delusional enough to think a Republican will win in 2012, bet them as much money as you can afford to lose. When Obama wins, you'll get a nice little year-end extra bonus. If anybody would like to bet me that Obama does not win, I'm open for business!

Analysis: It seems like a slam dunk now that Obama received more than 300 electoral college votes for his re-election. But, back in December 2011 unemployment was close to 9% and I received a lot of flak for this call. In fact, I followed up this prediction with a good natured post on a grassroots way to get Republicans to donate more to charity and got several takers to the tune of over $2,500. All proceeds are going to charity. I really enjoy putting my money where my mouth is. It helps me think things through more thoroughly. If you don't put your money where your mouth is, then it's like an entrepreneur coming up with a dozen ideas and never executing. 

2) The unemployment rate drops below 8%.

Just like that, the unemployment level breached 9% to 8.6% in the latest reading. And just like that, at some point in the 2nd half of 2012, unemployment flirts with 8% and then busts on through. Have you seen the holiday spending figures yet? En fuego! Nobody spends money on stuff they don't need if they don't have money and aren't confident about their job prospects. Simple logic folks.

Analysis: As of Dec, 2012 the current US unemployment rates is 7.7% as opposed to 8.6% a year ago. The Fed came out and said they will do everything possible to provide liquidity into the system until the unemployment rate drops below 6.5%. Don't fight the Fed. Take advantage of all its artificial manipulation as much as possible e.g. refinance your mortgage and ask for interest rate decreases. Holiday spending was strong then, and it is super strong now. 

3) There is no inflation. 

Despite tuition, food, and energy costs all going up, the government says we have no inflation, therefore the 10 year yield stays handsomely below 3%. We have become a nation of blindly following our leaders and letting them get away with whatever they want. One blogger friend in a previous post highlighted an Obama scandal he's pissed about, and when I asked him to write about it on his site, he said “he doesn't talk politics on his blog”!If that's not government omnipotence, I don't know what is! Our leaders would not be here if we did not believe in them. Hence, there is no inflation because they say so.

Analysis: The 10-year yield is at 1.7% vs. 2% a year ago, signifying tremendous slack in the system and demand for US dollar denominated assets. I really think people are wasting their money getting 30-year fixed mortgages. Interest rates have been going down for over 25 years in a row folks. Get a 5-year ARM or maybe even shorter instead. Just make sure you have a cash reserve. The inflation prediction was another bet I was trying to get others to take since investment bloggers to  fixed income strategists were all calling for higher inflation. Those silly geese.

Related: Are You A Real Millionaire?

4) The US markets have a banner year. 

Everything is relative. Given the 10-year yields no more than 3%, any return more than triple the 10-year yield is an amazing return. As of now, we're talking about a 6% return, however, may I be so bold to forecast a greater than 10% return on the S&P500 in 2012. That's right, we're talking S&P 1,400. Because the consumer is fine and spending again, corporate earnings continue to grow at a healthy clip.

The S&P 500 dividend yield is equal to the 10-year yield at 2%, and investors start asset allocating back into equities. Buy underlying shares of gold and oil as I believe they have an even better chance of being up 10% in 2012. International equities catch a bid as well and outperform the US, especially Brazil and the larger Asian markets. If I am up 10% in my overall portfolio at any point this year again, I will sell almost all my holdings just like in 2011.

Analysis: I've been waiting to publish this post until the last day given there's been no resolution on the budget talks. The S&P 500 ended 2011 at 1,257 and has indeed risen by more than 10% to currently 1,402 pre-open. The S&P 500 closed the last day of the year up 1.7% (23.76 points) to 1,426.19 as hope for a budget deal pushed the markets higher. During the year, we've done some asset allocation shifts by selling in May, getting back in July, selling after QE3 in September, and now full back in after the 7.5% dip.

The net result? Outperformance of the broader index for those of you following along all year. Meanwhile, Asian markets ended the year up around 17%, outperforming the US as predicted by more than 5%. Eventually, I'll get the directional prediction and the magnitude change wrong, but so far, it's been correct every year since this blog's inception.

5) Online advertisement spending surges, therefore blogging becomes that much more lucrative.

Some people worry blogging is a unsustainable stream of income. Clearly, they see the world through dark lenses.  With the continued improvement of the economy, the Olympics in the summer, and the Presidential elections, advertisement spending and industries that rise and fall with who gets elected are a boon to anybody with media property. There's no better time than right now to own a blog as more and more advertisement dollars get spent online. If you have a chance to buy a blog for less than 2X yearly revenue, do so with abandon. In the same token, there will be richer valuation acquisitions of personal blogs by big corporations due to the increased value of media properties.

Analysis: According to Forrester Research, online advertising spend in the US increased by more than 17% in 2012 to $12.7 billion. That's just the US folks and the web is global! Online ad spending is predicted by Forrester to grow by over 15% compounded annually and reach $27 billion by 2017. The trend is your friend. If you want to make money online, perhaps you should have a web presence? I'm so bullish on online media, maybe I will be able to achieve my 20 hours a week / $200,000 a year goal sooner than within three years. I sure as hell am going to try!

6) Five more Members of the Yakezie Network give it a go as full-time bloggers leading to a flood of followers. 

The longer you have your blog, the more valuable it becomes. With one more year under each Member's belt, coupled with the increase in advertisement spending all year, each Member sees their income rise by another 30-50% on average. Earning $50,000+ a year through their sites becomes common place, as Members know how to leverage the Yakezie Network and brand to their own advantage. We've launched our Yakezie Blogger Services for those interested in starting a blog as well. All are great people who provide competitive pricing and do solid work. The problem with these financial success stories is that many more will fail because they think it's so easy, enriching the “how to make money online” marketers even more.

Analysis: Hmmm, besides me, who else in the Network has quit their jobs to work on their own online endeavors? Kevin from Invest It Wisely did to start Digipom, a Android mobile app device company. Joe from Retire by 40 quit at the age of 39 after 17+ years at his high tech company to spend more time with his family. Jeff at Money Spruce left New Haven and moved to Portland to try his hand at freelancing. Shoot, that's only four! I know I'm missing someone else. Let me know! What makes me super pumped is that people are doing what they want to do. Folks are working their butts off, taking calculated risks, and going for things against conventional wisdom. Way to go guys!

7) Social Media is one of the worst performing sectors. 

You’ve already made a triple in Twitter in 2011, now it’s time to cash out. The amount of competition in every single space is obliterating returns quicker than a Congressman's mistweet. Social Media fatigue sets in, and there’s no more desire to “check-in” at your favorite bar due to stalkers. You resist tweeting your delicious meal due to an unknown follower compiling a compendium of what you eat. And you no longer update your Facebook page due to story after story about someone not getting a job thanks to what they posted. Privacy becomes King. The company who maximizes privacy insurance, or enables privacy insurance wins big.

Analysis: The bubble burst. Zynga and Groupon are down well over 65% this year. The Facebook IPO went from $38 down to $18. Private social media companies are having to dilute existing shareholders at value down funding rounds. Social Media has indeed been one of the worst industries to invest in this year. At least billions of dollars of value has still been created with employee lockup expirations. Well, just don't remind Zynga employees how senior executives were able to cashout at $13 in Spring while everybody else was left holding the bag.

8) US housing is one of the best performing investment classes. 

After five years of softness and pent up demand, US housing finds a strong footing. The US homebuyer shakes free from paralysis, and the international homebuyer takes the plunge given how incredibly more expensive housing is in Moscow, London, Hong Kong, Singapore, Beijing, Shanghai, Singapore, and even Canada now. A $25,000 rental income stream used to be valued at $500,000 on a cap rate of 5%. Now it’s worth $833,000 based on 3%, but prices have barely moved, yet.  People do the math and wisen up.

Analysis: US housing is coming back with a vengeance. San Francisco rents are up over 15% while property prices are up anywhere from 5%-12% in the Bay Area. You are hearing the same anecdotes from “superstar cities” such as New York City, Honolulu, and some of the best locations in LA and Chicago. These cities lead the charge, and the rest will follow. National home prices are up 6% in October year over year, the biggest jump since June 2006. If you don't need to sell your house, please don't. Refinance your mortgage, enjoy life, and wake up 10 years from now with a heck of a lot more net worth. 

See: Invest In Real Estate Crowdfunding

9) Mobile technology becomes the place to invest and work.  

The market for mobile software surges to some $20 billion dollars in 2012 from just $4 billion in 2011. Companies can't find mobile designers and software engineers fast enough as there is no doubt mobile computing is here to dominate.  Starting salaries for 24 year old graduates with 2 years of experience easily surpasses $100,000 a year, which begs the question: If you want a job, and want to get paid, why wouldn't you just get good grades and learn some programming skills? Venture capital pours into the mobile space like it did in the social media space and new mega fortunes are made. Google, Facebook, and Twitter is so 2011!

Analysis: Thanks to the Cloud, handset growth, technological innovation, and income growth in emerging markets with billions of consumers is driving mobile to new heights. If you want to make six figures, become a mobile engineer. If you're thinking of starting a startup, consider doing something that tightly involves mobile. Pretty soon, we are going to do everything on our mobile devices, especially for those who have leveraged the internet to create new careers online.

10) You will find love, fortune, and a flatter stomach. 

2012 is a year to stop making excuses as to why you can't find a suitable companion, why you still don't have a road-map to financial freedom, and why you still aren't as fit as you like. If you've seen the show The Biggest Loser, you know losing weight can be done if you want it. If you observe carefully, even the least attractive and poorest of people find great love. Meanwhile, people are getting rich every single day. I strongly believe that if you continue to read Financial Samurai and Yakezie all year, you will read informative articles that will help you get there. Writing about relationships, career, and fitness are favorite topics here.

Analysis: I hope you all did find love, a little bit of fortune, and a flatter stomach. I finally got below 160 lbs, after being 167-170 for 13 years after college. I gained half of it back after going to Europe for 2.5 weeks though! It feels good to feel lean again and I don't plan to get up there again, although I cannot resist stuffing my face with all you can eat French Cruller donuts and lemon meringue pies, so don't temp me! As for fortune, my income is lower since I no longer work.

However, my freedom is higher. I no longer have TMJ, grind my teeth, or chronic tennis elbow because my stress is much lower nowadays. As for love, I've always had love with my immediately family and friends. I hope you all have found new love, more fortunate, and a flatter stomach as well!

Related: The Health Benefits Of Early Retirement Are Priceless


* Retired from the corporate world after 13 years.

* Became poor by resetting to zero, but then positioned myself as middle class because being poor doesn't feel too good.

* Wrote a 200-page book on how to profitably quit your job by teaching folks how to negotiate a severance package. Please never quit, always get laid off instead.

* More than tripled average daily traffic on Financial Samurai with the help of a 50% increase in total content.

* Travelled for 2.5 weeks to various parts of Scandinavia and St. Petersburg to research the happiest people in the world.

* Went undefeated in league tennis and our team won the City Championships. Getting back in shape helped a lot.

* Did not give up.


It's always a little strange to review something you wrote one year ago. Wouldn't it be amazing if we knew then what we know now? We'd rule the world! To bad we don't have a Delorean.

I encourage every single one of you to write down your predictions for 2013. You will be forced to think in rational thought as you predict the future, in order to make profitable financial bets. Don't just sit back and wait for my predictions for 2013. Make your own because all of us are in different financial stages with different needs and desires.

Hope is not a strategy for achieving financial freedom. You must meticulously plan. Don't be intimidated by numbers. You can be wrong. Just make sure you know why! I hope you enjoyed my Financial Samurai 2012 predictions recap.

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I never thought I'd be able to quit my job in 2012 just three years after starting Financial Samurai. But by starting one financial crisis day in 2009, Financial Samurai actually makes more than my entire passive income total that took 15 years to build. If you enjoy writing, connecting with people online, and enjoying more freedom, see how you can set up a WordPress blog in 15 minutes like mine with my step-by-step-tutorial.

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25 thoughts on “Financial Samurai 2012 Predictions Recap”

  1. I gotta work on that flatter stomach! I’m predicting the economy will keep chugging along at a snails pace first quarter, then ramp up second quarter. Here’s to a great 2013!

  2. I will predict that I will meet the online PF guru himself, Sam Dogen, in 2013. This will be either at the location of FINCON13 or some other place that I’ve never been before. Hopefully, it’ll be a place where I can continue my attempt at fluently speaking Spanish.

  3. Your wisdom and ability to accurately predict reminds me of Ron Paul – except you know not to fight the Fed. Congrats on a great 2012 and best of luck in 2013.

  4. A lot of great predictions!

    I was sick from Christmas Eve until two days ago or so with the flu, and am still sleeping a lot and slowly making up for lost time. But I feel SO much better, and hopeful again about 2013 (being sick tends to suck the life out of you).

    Happy 2013 to us all!

  5. Your ability to critically analyze financial topics is impressive Sam. Well done. While I don’t always agree with your mindset, I appreciate most of your content and your fortitude. The X factor in life is fortitude/effort and you have it. I enjoyed reading the analysis of your predictions from a year ago.

    Best wishes in the new year. Chris.

    1. Thanks Chris. It would get boring quick if everybody agreed with how I think. It’s more interesting to entertain different viewpoints and learn. Perhaps you should start your own site too!

  6. Impressive! Is there a way you can predict 2013 for me? :) Are you going to post your 2013 predictions and strat taking bets? You should! Happy New Year, Sam!

    1. The 2013 predictions are coming up. Unfortunately, they won’t be that exciting as we’re in an upcycle, so more of the same.

      If there is anybody who disagrees and wants to make some friendly bets, I’m happy to take the other side. Gotta put your money where your mouth is!

  7. Well done, Sam. I like the idea of making predictions so you can see where you end up, and really put your money where your mouth is on some of them. No better way to think through a prediction than to put your own money on the line!

    Now you’ve got me thinking, I might look at doing something like this as well….Though I don’t have a background in the financial sector, so I probably won’t be predicting anything in the markets. I think my predictions will be more something about how many people will become debt free due to getting on a budget through my site…

    And I’m still happy about my 30-year mortgage, though I agree the 5-year arm has proven to be a great bet for those who have gotten them in the past few years. :)

    1. Looking forward to your predictions Jacob. If you have a reason why you think the way you do, nobody will blame you for being wrong. I think a 5/1 ARM is going to continue to be a money saver for the next 10 years. Although, anybody refinancing their 30 year to another 30 year is a winner too!

  8. Great job! All investments go through cycles and it makes you realize that we need to take a longer view on them. Unfortunately, the down cycle has lasted longer than any of us likes. I am looking forward to 2013.

  9. Good job on the predictions. You hit so many things right on the head, it’s pretty amazing really. Suba also left her job so there you go – at least 5 people. In the real estate department, Portland lags CA about 1-2 years so hopefully we’ll have a good year in 2013.
    Happy New year!

  10. Congrats on a successful 2012 Sam! You did quite a lot and I applaud you for pursuing your online endeavors full time, writing a book, traveling etc. It doesn’t feel like today is New Years Eve already except for the freezig cold air outside. Best wishes into 2013!

  11. Great article! I look forward to the 2013 predictions. I hope to see more topics of financial freedom, retirement, soaring college costs and debt, and Sam’s travel review’s.
    My 2013 game changer curve ball prediction this year is not good news. I predict their will be no diplomacy agreement with the world and Iran over the nuclear issue. President Obama will be forced to act in 2013 against Iran. Yet challenge can bring reward, so be invested in Energy.

    1. Thanks for the feedback Mitch. I’ve got some good travel related posts in the works, which aren’t just about checking out the place. They’ll have deeper meanings to them.

      Let’s hope for less war in 2013!

  12. Great job on the predictions! I couldn’t even predict my own life correctly, let alone world events! Have an awesome 2013 Sam.

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