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10 Massive Market Surprises for 2014


It's that time of year again when predictions are made, and trends are broken.

It's tough to make predictions, especially about the future.
– Yogi Berra

There's nothing investors love more than a good prediction. This is especially true this time of year as we desperately want to know what's going to happen in the coming year. The truth, of course, is that it is impossible to accurately predict what's going to occur in the markets over such a short period of time.

That said, predictions are fun, and in the spirit of giving, I am going to give readers what they want. I'm officially throwing my hat into the prediction ring.

Below are the 10 surprises for 2014 that I believe have a 100% chance of occurring:

1. After having one too many drinks at his retirement party, Ben Bernanke reveals that quantitative easing (QE) was never actually intended to help the real economy. It was merely a $1 bet (à la Trading Places) over whether he could fool the masses into believing that QE could create jobs. The bet was between Bernanke and one of his most trusted secret advisors, Kanye West. As word of the bet becomes front-page news, the Fed is forced to not just taper but end QE altogether.

2. The consumer price index spikes higher and inflationary concerns dominate the investing landscape. Janet Yellen becomes the mini Volcker and initiates a series of rate hikes that bring the Fed funds rate up to 6% by year-end. Savers and retirees rejoice and Ron Paul pens a new book on why the Fed should never be eliminated.

3. The Dow Jones Industrial Average (INDEXDJX:.DJI) grinds lower throughout the entire year in the exact opposite pattern to 2013. Sell the F'n Bounce (STFB) replaces Buy the F'n Dip (BTFD) as the most popular investing adage.

4. The price of Bitcoin surpasses the price of the Dow. The Winklevoss twins, the largest investors in the digital currency, make tens of billions on a levered trade, surpassing Mark Zuckerberg on the billionaire list. In an ironic twist, the twins successfully execute a hostile takeover of Facebook (NASDAQ:FB), change the company name back to ConnectU, and play themselves in a remake of the movie. The ascot replaces the hoodie in the company's dress code.

5. At a New Year's Eve party at TGI Friday's, Bill Ackman and Carl Icahn are both in attendance. In line at the buffet, Ackman takes the last of the "loaded" potato skins which he knows are Icahn's favorite. In a fit of rage, Icahn yells to Ackman that he is going to make a tender offer on Herbalife (NYSE:HLF) just to "burn your arse," channeling his inner Wall Street. Ackman makes good on this threat and tenders Herbalife for $200 per share. To add insult to injury, he takes JC Penney (NYSE:JCP) private and quickly turns the company around.

6. China renames 2013 the Year of the Honey Badger.

7. Quieting all of the doubters, Amazon (NASDAQ:AMZN) drones become a reality in 2014. All shopping malls are replaced with Amazon distribution centers as consumers never have to leave their homes again. Amazon becomes the world's largest company and at the same time loses more money than any company in history.

8. Financial TV ratings drop below many daytime soap operas', prompting management to change the format to scripted dramas. The most popular show is entitled One Life to Lead Investors to Financial Ruin and is based on a true story, their current programming.

9. fixes all of its bugs and becomes the model website in terms of speed, stability, and security. Kathleen Sebelius is hired away by Google (NASDAQ:GOOG) to share the secrets to the website's success.

10. Japan remains unsatisfied with the pace of yen depreciation. Prime Minister Shinzo Abe, a big fan of Richard Pryor, comes up with a brilliant plan while watching Brewster's Millions on Netflix (NASDAQ:NFLX). Abe hires a team of experts in an attempt to lose money and move the yen lower. Their best idea, of course, is to go all-in on Bitcoin, which unexpectedly continues to rise, driving the yen to record highs against all other currencies (see No. 4).

What do you predict for next year?

Twitter: @pensionpartners
No positions in stocks mentioned.

This writing is for informational purposes only and does not constitute an offer to sell, a solicitation to buy, or a recommendation regarding any securities transaction, or as an offer to provide advisory or other services by Pension Partners, LLC in any jurisdiction in which such offer, solicitation, purchase or sale would be unlawful under the securities laws of such jurisdiction. The information contained in this writing should not be construed as financial or investment advice on any subject matter. Pension Partners, LLC expressly disclaims all liability in respect to actions taken based on any or all of the information on this writing.

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