Predictions always put you on shaky grounds, and markets are notoriously difficult to predict. With that said, I will look into my crystal for 2015 with predictions for different asset classes:
The US markets are at nominal records, whilst some markets are still struggling. This has made some people very cautious about the Dow Jones and S&p, but it does appear as though the US economy is rising and sentiment is on the side of the USD, US equities and US housing. Don’t be surprised if the Dow reaches 19000-20000 sometime next year.
As previously mentioned, sentiment is on the side of the USD, and to a lessor extent, the Euro and Sterling. The new `currency wars` and devaluations appear to be happening in Asia – starting with Japan but also with oil exporting countries. There will be a bottom somewhere and patient investors can gain from volatility – as the sharp appreciate of the Russian Rubble after previously devaluations shows. For cautious and longer-term investors, stick the cash component of your portfolio in USD.
Commodities are extremely volatile, as the recent price of oil suggests. Commodities is a risky play but with oil trading in the $50s, it is hard to see how medium term investors won’t make a profit. In fact, it is realistic that oil will be trading at at least $70 this time next year. Some oher commodities that have fallen sharply may rise this year from current low levels on technical buying.
The combination of quantitative easing and rising economies meant that real estate prices in many developing countries has skyrocketed. However, times and sentiment has changed. Already the depreciation of many emerging market currencies and falls in some housing markets, has meant that USD returns this year have been steep. Expect the same trend next year in terms of lower USD based prices in many markets. US housing in many cities look well-placed to gain from an improving economic outlook.
So those are my predictions for 2015. Let’s wait until next year to see how accurate they are.