2013 Predictions on Financial Markets (If The World Does Not End Tomorrow)

By Lawrence

Others Predictions

There are some interesting predictions I have seen that are worth mentioning.

First, the one for its entertainment value goes to Saxo Bank’s annual "Saxo Bank 10 Outrageous Predictions for 2013"

Second, is John Mauldin’s "We’ve Had A Good Few Years, But It’s Now Time To Prepare For A Huge Drop In Earnings" for its sensible approach.

My Predictions

Many asks for my longer term view going into 2013.

I do not usually do that because I use January as my yardstick to project price levels and directions for the year. So it is quite difficult for me to dish out useful projections this point in time. Since it is good publicity for the site, I will do it for the sake of entertainment only.

Here we go, my predictions for the year 2013:

US Stock Market Will Top Out In First Half Of 2013 If The Top Is Not Already In Place

My cycle work suggests a multiple year market top is due from now to first half of 2013. The US stock market will enter a cyclical decline phase for several years. Somehow it agrees with the article mentioned above (the one by John Mauldin) which uses a completely different approach from mine.

World Stock Markets Going Into Decline for Several Years

As US stock market going south, the rest of the stock markets will go down with it.

Collapse Of Japan Economy And Its Financial System

The redemption of their government bond has already happened. Japanese government bonds have always been supported mainly by their people, especially their older generation. There is no wealth nor cash flow from the younger generations. So net outflow of money for the government when the older generation is cashing out their bonds to survive.

The only route Japanese government can do now is to have Bank of Japan buying all their new issues, just like what the Fed is doing for the US government.

Japan should be one of the first countries forced to reset their financial system.

European Union No More

The people do not want the union any more. It is already over.

Think of it as an ugly divorce in progress.

Acceleration of Faster And Wilder Swings Across All Markets Making It Extremely Difficult To Trade

When structural collapses happening here and there, essentially everywhere, we get many market shocks. So expect very fast and wild price swings in all markets. Market timing and straight money management becoming the most important tools for years to come.

In summary, my long term idea for year 2013 is to short stock markets worldwide, and eyes on short term crazy swing opportunities in forex.

Feel free to submitting your predictions in the comment section!

Share

Comments
  • geosing December 23, 2012 at 5:38 pm

    LC, Thanks for the heads up. Your statement that it will be difficult to trade – will that apply to swing and long term trading or are you saying that even day traders will see fast market conditions more often? a la flash crash and last Friday’s scary drop. Although I am used to limit days in grains, this is the first time I saw a limit move in the ES. Didn’t stay there for long though. I guess most bull stops have been cleared.

    Interesting key note by Kyle Bass. Too bad one cannot see the slides in this video clip.
    Dude is not too optimistic about Japan and EuroZone, although he concluded with US being not so bad as the rest of the world – thus confirming his own confirmation bias he talked about. 🙂

    http://www.youtube.com/watch?v=JUc8-GUC1hY&feature=youtu.be

    Happy Holidays and my best wishes for a healthy, prosperous and therefore happy 2013. And thank you for sharing the trading wisdom.

    • Lawrence Chan December 26, 2012 at 12:33 pm

      Happy holidays to you too!

      On the difficult to trade part – it will be difficult to trade in both swing and day trading level.

      Not sure what Mr. Bass is holding at the moment so cannot read between the lines if he is talking his position or talking about the situation objectively. =)

      • geosing December 26, 2012 at 12:57 pm

        Thanks. On the whole the Bass forecast appeared to be in line with yours – esp Japan

      • Lawrence Chan December 30, 2012 at 12:52 pm

        His view is much more comprehensive because he gets to talk to those people there who are in charge of the situation.

        So he can tell how f$#ked up these people are upclose and personal.

        My view is purely based on the data available and the clear cyclical behaviour in economic activities.

  • You must be logged in to comment. Log in