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I whipped out my crystal ball last week and made three predictions for the year ahead. It's time to go out a bit further on the limb and make a few more market calls.
1. Gold prices will fall in 2010
Gold bugs will be quick to point out that I only went 8 1/2-for-9 on my predictions for 2009. The fractional miss in the mix is that I called for oil prices to rise (which they did) and gold prices to fall (which they clearly did not).
Well, I haven't learned from my half-mistake. Gold's rise during the recession is tied to many factors, but one of the primary drivers was a flight out of distressed asset classes. Now that real estate prices are bottoming out and global equity markets have regained some of their luster, I see all of those "cash for gold" late-night infomercials -- so emblematic of a bubble -- going away.
2. Facebook will go public
Modesty has never been a Facebook trait, but it needs to check its pride at the door and go the IPO route in the coming year. Registrations are still growing nicely but showing signs of deceleration. Friendster's remains and the slow fade at MySpace are warning signs of what can happen to a social-networking site after it peaks.
Facebook was right to reject Yahoo!'s (Nasdaq: YHOO ) advances while it was still in the crib and give Microsoft (Nasdaq: MSFT ) only a taste, but it has to realize that employee retention and broader brand awareness are waiting at the other end of a public stock offering.
3. Netflix will be acquired
The rumors have been around for years, but 2010 should be the year that finds Netflix (Nasdaq: NFLX ) being acquired. It doesn't have to be the obvious Amazon.com (Nasdaq: AMZN ) doing the nibbling. There are more potential suitors than you think. The initial stumbling block will be Netflix's reluctance to cash out while it's still growing briskly.
As it stands, Netflix is trying to sway movie studios into offering hot releases through its online streaming platform. That's not going to happen. Netflix will run into enough resistance there -- and recognize that time is running out on optical discs -- to entertain an exit strategy.
4. E*Trade Financial will be acquired
Did you catch how E*Trade's (Nasdaq: ETFC ) quest for a CEO replacement ended in tapping a board member as interim CEO? That's just one of the signs that the discount broker's next CEO will come from the company that acquires it.
E*Trade has made decent strides over the past year to separate its growing brokerage business from its slammed online banking unit, but it's also a golden opportunity for a larger financial services rival to step in before confidence swells.
5. Apple will go 4-for-4
Forget the tablet computing buzz, the health of Steve Jobs, or the iWhatevers that Apple (Nasdaq: AAPL ) rolls out over the coming year. Earnings are what will ultimately drive the Cupertino darling's stock, and I believe that Apple will top Wall Street expectations in each of the next four quarters.
That probably sounds like a gutsy market call, but Apple has consistently been trouncing analyst targets for several years.
Play on, 2010.
I'll be back next week with even more predictions for 2010. It's your turn now. Share your market calls for 2010 in the comment box below.