Possible Improbables

Doug Kass is out with his annual list of long shot events that have a better chance of occurring than most people expect. They are, as always, quite intriguing and thought provoking.

Interestingly, almost half of Kass' last year's improbable surprises came to pass (up from 33% in 2006 and 20% in 2005).

It's subscription only, but will eventually get moved to the free site. Consider this a teaser -- these are just the headlines, without the full analysis/explanation.

Without further ado, here is the excerpted list of 20 improbable surprises:

Kass' 20 Surprises for 2008

1. The Housing Depression of 2007 morphs into the Retail Spending Depression of 2008.

2. Corporate profits drop by 10% in 2008.

3. The S&P 500 Index falls by 5%-10% in 2008.

4. Volatility pushes even higher. Daily moves of 1%-2% become commonplace.

5. The Federal Reserve eases monetary policy in 2008, with nearly every meeting accompanied by a 25 bp cut.

6. Growth in the Western European economies deteriorates.

7. The Chinese juggernaut continues apace. Chinese stock market doubles again in 2008.

8. The Japanese market puts on a surprising resurgence.

9. The housing bust accelerates. High profile bankruptcies in 2008 include Countrywide Financial (CFC), Beazer Homes (BZH), Hovnanian (HOV), Standard Pacific (SPF), WCI Communities (WCI) and Radian Group (RDN).

10. Financial stocks fail to recover.

11. Research in Motion (RIMM), Apple Computer (AAPL) and Google (GOOG) move into bubble status and their shares double in 2008.

12. Yahoo! (YHOO) and eBay (EBAY) merge. So do Amazon (AMZN) and Overstock.com (OSTK).

13. General Electric (GE) will sell NBC Universal to Time Warner (TWX), which will not sell or spin off AOL.

14. U.S. dollar's value falls by over 10% in 2008; Gold rises to over $1,000/oz.

15. The price of crude oil eclipses $135/barrel.

16. Acts of cyberterrorism occur that compromise the security of a major government. Financial markets will be exposed to hackers.

17. The hedge fund community is disintermediated in 2008. Outflows accelerate.

18. There are several Enron-like accounting scandals in 2008.

19. Democrats Clinton/Kerrey and Republicans McCain/Crist represent their parties in the Presidential/Vice Presidential contest in November. Democrats grab the White House.

20. Sovereign Wealth Funds become targets of American politicians.

Thanks for putting this together, Doug. It's a terrific, fun exercise in creative thinking. (The full version can be seen at Real Money Silver).

Source:

Kass' 20 Surprises for 2008
Doug Kass
Real Money Silver, 12/31/2007 7:56 AM EST
http://www.thestreet.com/b/dps/te/20071231/theedge1.html#entryId10396433

Comments

[ballsschweaty:]

I'd like to see Doug Kass' investment results. I think they are rather horrid.

2008 Jan 01 09:08 PM

[sliman:]

I would like to see Barry and Doug publish their client results.

2008 Jan 01 09:57 PM

[robert99:]

I would like to see Barbara Bush naked.

2008 Jan 02 02:26 AM

[sliman:]

How about Doug, Barry and Barbara together.

2008 Jan 02 05:57 AM

[David Schrader:]

There should be a national database of investment results... everyone who wishes to participate would be required to have an independent audit of the accounts they manage. Maybe then people would be able to find out who's done well and who shouldn't be touching their own money. And yes, I know the plausibility of such a thing is low.

2008 Jan 02 10:12 AM

[Tom B:]

"7. The Chinese juggernaut continues apace. Chinese stock market doubles again in 2008."

China is a bubble. I avoid buying into centrally run semi-Communist govts.

"8. The Japanese market puts on a surprising resurgence."

I hope. I've been waiting......


"10. Financial stocks fail to recover."

I still HAVE BAC and I still USE Etrade. I hope I'll be OK......

"11. Research in Motion (RIMM), Apple Computer (AAPL) and Google (GOOG) move into bubble status and their shares double in 2008.

RIMM IS already a bubble. AAPL is fairly bubble-proof because MSFT pays TONS of people (Thurott, etc) to trash Apple full-time.

"12. Yahoo! (YHOO) and eBay (EBAY) merge. So do Amazon (AMZN) and Overstock.com (OSTK)."

Makes sense.

"13. General Electric (GE) will sell NBC Universal to Time Warner (TWX), which will not sell or spin off AOL."

If nothing else, NBC needs to be managed by a non-idiot (that is, a non-Zucker).

"14. U.S. dollar's value falls by over 10% in 2008; Gold rises to over $1,000/oz."

Only 10%? Hopefully not more!


16. Acts of cyberterrorism occur that compromise the security of a major government. Financial markets will be exposed to hackers."

Does Putin have a good motive?

2008 Jan 02 11:06 AM

[gordon:]

what's going to help Japanese exports ?, no way on that one. Dead wrong.

2008 Jan 02 11:39 AM

[Vinsanity:]

That national database of investment advisors would not make this list it is so low probability (no matter how good an idea it is). E.G., i build custom portfolios for each client, so I have no standardized performance numbers to report.

2008 Jan 02 11:48 AM

[Sr. Pessimist:]

1. The Housing Depression of 2007 morphs into the Retail Spending Depression of 2008. -- Yeppers.

9. The housing bust accelerates. High profile bankruptcies in 2008 include Countrywide Financial (CFC), Beazer Homes (BZH), Hovnanian (HOV), Standard Pacific (SPF), WCI Communities (WCI) and Radian Group (RDN). -- More or less.

10. Financial stocks fail to recover. -- Yeah.

14. U.S. dollar's value falls by over 10% in 2008; Gold rises to over $1,000/oz. -- Yep.

15. The price of crude oil eclipses $135/barrel. -- Yep.

16. Acts of cyberterrorism occur that compromise the security of a major government. Financial markets will be exposed to hackers. -- Ummm-hmmm.

17. The hedge fund community is disintermediated in 2008. Outflows accelerate. -- Bust cycle.

18. There are several Enron-like accounting scandals in 2008.

19. Democrats Clinton/Kerrey and Republicans McCain/Crist represent their parties in the Presidential/Vice Presidential contest in November. Democrats grab the White House.

2008 Jan 03 12:00 AM

[Sr. Pessimist:]

2. Corporate profits drop by 10% in 2008. -- This too.

2008 Jan 05 11:08 PM