EDMOND — “A penny for your thoughts,” my mother used to say. That’s probably all they were worth then. But then again, maybe not much has changed. You get mine for free, although some might say you get what you pay for.

It’s that time of year again when economists and other prognosticators are making their predictions for 2010. Their projections are all over the board and more diverse than I have ever seen before. Not to be outdone, and perhaps with less trepidation than I should have, your fearless forecaster forges ahead, sometimes wrong but never in doubt.

So let’s look back at what I said in my Jan. 17, 2009, column and see how I did. I think I hit 100 percent for 2009, but you can be the judge. The following are the predictions and then what actually happened:

1. “The Dow rallies to between 10,500 and 11,500 in 2009.” The Dow finished the year at 10,428 after a high of 10,580. That’s the low side of the range, but at least I made it. I wasn’t counting on the Dow taking a little trip to 6,500 first and then have to climb 4,000 points in eight months.

2. “Oil rallies to $80 a barrel by the end of 2009.” Bingo! I hit that one right on the head with oil finishing the year at $79.67 after a high of $82 and an incredible low of $33.

3. “The national unemployment rate reaches 9 percent to 10 percent.” Right again, although I wasn’t quite negative enough. Official unemployment hit 10.5 percent and finished the year at 10 percent. The real number they don’t want to talk about is actually above 17 percent.

4. “Global GDP growth falls below 2 percent for the first time since 1991.”  Preliminary figures look like global GDP growth will be about 1 percent for 2009.

5. “Corporate earnings fall again in 2009, the first back-to-back drop since the 1930s.” Partially correct. Corporate earnings fell in the first half of the year, but started to rise again in the second half. The total for the year still was below 2008.

6. “The U.S. federal budget deficit soars to $1.2 trillion; and to almost $2 trillion if the Obama administration gets its entire stimulus package approved.” Correct. The fiscal year 2009 U.S. federal deficit was $1.5 trillion and totaled nearly 12 percent of GDP — the worst in modern economic times. Public, i.e. government, debt hit 85 percent of GDP, up from 62 percent in 2007.

Not bad. Now the real fun begins. Can I back it up in 2010? We’ll see. I should probably quit while I’m ahead, but I’ll stick my neck out once again. Here are my top 10 thoughts for 2010:

1. The Dow continues to climb to 11,300 but heads lower in the second half of 2010, falling back to the 8,500 level by year end.

2. The housing market improves slightly in the first half of the year and then falls again by late 2010 as a tsunami of Alt-A and Option ARM mortgages reset this year, leading to another surge in foreclosures and home prices falling another 10 percent.

3. The national unemployment rate remains stubbornly high and exceeds 11 percent by late 2010.

4. The U.S. federal budget for 2010 runs another $1.5 trillion deficit and maybe even $2 trillion. U.S. government debt hits 94 percent of GDP.

5. Oil prices inch higher in 2010. As world demand increases and peak oil becomes acknowledged, oil prices hit $100 a barrel, further depressing the U.S. economy.  Geopolitical tensions, particularly in the Middle East, could drive oil prices much higher if war breaks out.

6. U.S. economic recovery continues with positive GDP growth in first and second quarter, mostly due to inventory rebuilding. The recovery stalls and we see the early signs of a double-dip recession by the end of 2010.

7. The U.S. Fed raises interest rates earlier than expected. The 10-year Treasury bond yield hits 4.7 percent by late 2010.

8. The U.S. dollar explodes higher in 2010. Although we have lots of problems, the world realizes that we’re not as bad as they thought and everyone else is not that great.

9. Gold likely will fall below $900, although it could go to $1,300 first. It’s one of the most crowded trades out there.

10. More than 500 U.S. banks fail in 2010, up from 150 in 2009. Several major European banks fail due to defaults in former Eastern block countries and the weak links in the Euro zone, the so-called PIIGS (Portugal, Ireland, Italy, Greece and Spain), triggering the next leg down in Europe.

So there you have it. You may have noticed that I’m not too optimistic about 2010. Let’s hope I’m wrong. We’ll review it again early next year and see how I did. Thanks for reading.



NICK MASSEY is a financial adviser and owner of Householder Group Financial Advisors in Edmond. Massey can be reached at www.nickmassey.com. Securities offered through Securities Service Network Inc., member FINRA/SIPC.