It’s that time of year when we start to think about eggnog, beef Wellington, and last year’s stock market predictions.
Here is what I predicted last year and how those forecasts turned out…
You can read the full version from a year ago here.
“Seven Predictions for the New Year”
1. Mortgage Debt as an Automatic Teller Machine
Prediction: The mortgage refinancing service industry will have a record year. Stewart Information Services Corporation (NYSE: STC) is my pick for Bull and Bust Report readers. The company makes the software you might have seen at closing. The stock has doubled since the March lows.
STC is up 64% this year and pays a 2% dividend. The company has a P/E of 6.71 and saw earnings grow 58.60% last quarter (year over year). In comparison, the Nasdaq is up 18% year to date.
That’s one in the win column.
2. Hydrogen Economy
Like Brazil, the hydrogen fuel cell industry has always been the sector of the future. But now it is happening. Plug Power (NASDAQ: PLUG), a company that makes fuel cell electric vehicles (FCEVs), is up to $30 with a $12.70 billion market cap. I first recommended it at $2 many years ago and made more than 500% gains.
Ballard Power Systems (NASDAQ: BLDP), another pioneering fuel cell company, is pushing $6 billion in market cap. But perhaps the most important news is that Toyota has increased its commitment to fuel cells and will have a new model of its Lexus-like FCEV next year called the Mirai. What many people don’t know is that you need platinum as a catalyst for the hydrogen fuel cell, which is why platinum is breaking out. Prediction: Platinum prices will jump 50%–100% in 2021.
This was wrong; cue the sad horn. I picked the only commodity that went down last year. Platinum fell from $1,020 per ounce to $941 per ounce.
3. Spatial Computing
Most of these you have heard about, but you are probably new to the idea of spatial computing (SC). SC is simply the technology in which computers or robots interact in a 3D world. One segment of this technology will be managing swarms.
One company I recommended that makes sensors and headsets is up 55% since I recommended it on December 11, 2020, to BBR readers. That was less than two weeks ago!
This stock continued to run up to a high of over 400% before pulling back. Sorry, but this pick is reserved for paying Bull and Bust Report members.
4. Cloud Boom
Next year the cloud leaders will continue to make the most money. These are Amazon Web Services and Microsoft Azure — with Google Cloud Platform and Alibaba as the chasers.
If you don’t own Microsoft (NASDAQ: MSFT) and Amazon (NASDAQ: AMZN), you should, and now is a good time to buy as they have been consolidating for the past six months.
Microsoft and Amazon will continue to dominate in the cloud. Share prices will climb more than 30%.
Microsoft is up 47.13% year to date.
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Amazon, however, is only up 4.60% this year.
In my defense, AMZN would have been up 15% a month ago. Still, the average of these two would be 25.8%, which would have beaten the 22.95% the S&P 500 achieved. So it’s a win.
5. 5G
5G cellphones will continue to build out. This will produce an internet that is up to 100 times faster. It will also create a tremendous amount of new data. The great irony of 5G is that after the data flies through the air, it must end up at a server farm. And to do this, it will need up to 10 times the amount of fiber optic cable now used.
Companies like Corning Inc. (NYSE: GLW) and Hammer Fiber Optics Holdings Corp. (OTC: HMMR) will benefit.
Corning is up 2.21% year to date.
Hammer Fiber Optics Holdings Corp. is up a whopping 173.33%. A month ago, it was up 324%!
On average, this call was up 87.77%. That’s a big win.
6. Fintech
Square and PayPal have seen their share prices grow more than 100% this year. Next year this will continue but adjust. In 2021, the end of COVID-19 fears will see a jump in international trade and payments. The big winners will be Mastercard (NYSE: MA) and Visa (NYSE: V), which have been relatively flat this year.
Western Union’s (NYSE: WU) share price will jump 50% as remittances climb due to reopened borders and housing boom workers sending money back home.
Turns out COVID fears never did end…
Western Union is down 19.25% year to date.
Mastercard is down 3.32% year to date.
Visa is down 4.65% year to date.
This call was a loser. The never-ending COVID cycle put a strain on travel and reduced cross-border fees. Still, as losing calls go, this wasn’t too bad.
7. Emerging Markets
Emerging markets (EMs) have been undervalued for almost 10 years, but now they are at the extreme. Every dog has its day and that day is about to show up for EMs.
First of all, in an era of exploding valuations in the U.S., EMs are cheap. Furthermore, a falling dollar, Wall Street seeking yield, and China stocking up on commodities will be the catalysts for a once-in-a-generation rebound.
You could buy the ETFs. The three most popular exchange-traded funds (ETFs) are iShares Core MSCI Emerging Markets ETF (NYSE: IEMG), Vanguard FTSE Emerging Markets Index Fund ETF Shares (NYSE: VWO), and iShares MSCI Emerging Markets ETF (NYSE: EEM).
Prediction: 2021 will be the year of the emerging market.
It turns out 2021 was not the year of the emerging market. This is mostly because the Chinese government cracked down on all of its big tech names like Alibaba and Tencent.
EEM is down 8.97% year to date.
IEMG is down 7.54% year to date.
VWO is down 5.32% year to date.
There it is.
The record states I have four winning and three losing predictions from last year.
That said, the winners like Microsoft, Hammer Fiber Optics, STC, and spatial computing far outperformed the losers, most of which were down in the single digits.
Next week, I will sacrifice an albino goat under the new moon, dig through its entrails, and give you my startling predictions for 2022.
Stay tuned,
Christian DeHaemer 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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