Four Predictions for 2016
FANGs Will Die
The one thing I know about the markets is that when an investing trend gets a popular moniker, its days are numbered. Think BRICs and Dogs of the Dow. Crowded trades should be avoided.
Last year, the best-performing large-cap stocks were Facebook, Amazon, Netflix, and Google. These have been dubbed the FANGs, and without them, the market would have been in the red.
According to Yahoo, Amazon has a P/E of 982. According to my wife, it no longer has the lowest prices or the best selection, nor is it the only place with free two-day shipping. Also, as we live in Maryland, and Amazon just built a warehouse in Baltimore, I will no longer save the state sales tax of 6%.
Furthermore, Jeff Bezos, the famed CEO, is more interested in space and owning the Washington Post these days than running Amazon. The stock also tends to sell off after Christmas.
Driverless Car Stocks Will Soar
Ford just signed a deal with Google for driverless cars. Every car company on earth is going for autonomous autos. They will be here by 2017.
The companies that make the parts, sensors, and software to put these on the road will benefit.
Student Bubble Will Pop
When something can't go on, it won't. Student debt is at $1.3 trillion and climbing. Student enrollment in higher education is already falling. Tuition price hikes have been halted at some universities.
The crisis will peak in 2016.
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Iran Will Be the Best-Performing Market
Iran is a country with 80 million people and the world's oldest civilization...
It also has the world's third-largest oil reserves (with 30 million barrels of oil floating in tankers ready to hit the market) and a young, well-educated, and Western-looking population. The average wage is less than in Vietnam.
And what gets my juices flowing: Tehran also has the most undervalued stock market on earth.
The average price-to-earnings ratio is 5.5, and the average dividend yield is 15.8%. The total market value of the 337 companies listed is just $90 billion.
Imagine what happens when the economic sanctions are lifted in the first half of 2016. Hedge funds are already flocking to Tehran.
But don't take my word for it. The Wall Street Journal says:
Analysts expect the stock market in Tehran to be among the biggest early beneficiaries of foreign investments if a final sanctions-lifting deal is sealed.
The Tehran Stock Exchange has the potential to go up 2,500% or more, just like we saw in post-sanctions Russia and South Africa.
All the best,
Since 1995, Christian DeHaemer has specialized in frontier market opportunities. He has traveled extensively and invested in places as varied as Cuba, Mongolia, and Kenya. Chris believes the best way to make money is to get there first with the most. Christian is the founder of Bull and Bust Report and an editor at Energy and Capital. For more on Christian, see his editor's page.
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