2008 Predictions part 2
Last week I made a slew of Web 2.0 predictions and now I have some economic and financial predictions for the new year.
1. Google stock will close the year above $1,000/share-a 900 percent increase from $100 just four years ago. Google’s growth is absolutely staggering. There is no internet company that can compete with them. Yahoo’s Microsoft and Interactive Corp (ask.com) efforts to compete with Google have largely been failures. Related reading: http://iamned.com/blog/2007/11/05/google-surges-past-700-a-share-without-resistance/
and
http://iamned.com/blog/2007/10/30/google-nears-700-a-share/
2. Baidu, a chinese web portal similar to google will end the year above $800/share from the current price of $390. Internet use in China has EXPLODED in the past five years and Baidu has a robust 60 percent of marketshare followed by Google China, Sina, Netease, and Sohu. Baidu’s earnings have surged over 2,500 percent since going public several years ago.
3. The ‘credit crunch’ and ’liquidity crisis’ will remain isolated probems that only affect commercial banks, investment banks, hedge funds, and mortgage companies. There will be NO spillovers to other sectors.
4. The Dow Jones Industrial Average will end the year above 16,000, a 2,700 point increase. The truth of the matter is the ‘credit crunch’ is not a big deal because it only affects financial companies and revenue and profits for multinationals will continue to rise steadily due to globalization. Exporters and multinationals such as Boeing can take advantage of the cheap US dollar and booming global economy to sell more goods which translates into more growth and higher share price.
5. The technology heavy Nasdaq index will end the year above 3,000 thanks to technology leaders Google, Cisco, Microsoft, Oracle, Apple, and Research in Motion. These large cap tech companies have massive global growth and will will continue to do so.
7. The S&P 500 will end the year above 1,700 for the same reasons above, chiefly huge global growth from multinationals. Also, the S&P index average PE ratio is only 18, which is well below the PE ratio during the 1999 dotcom bubble. there is still plenty of upside left.
6. Small cap stocks will continue to underperform because they lack the global exposure of large cap stocks. Small caps can’t take advantage of globalization as easily as larger companies, which is why they underperformed in 2007 and will certainly underform in 2008 as well.
Those are my major economic and finance predictions for 2008. If you have any predictions feel free to contribute.