My 8 Largely Pitiful Predictions for 2010

I flew my waxy wings too close to the sun this year.

I was feeling cocky after nailing 8 1/2 out of 9 predictions in 2009, so I decided to go out on longer limbs this year.

Instead of general market trends or stock direction calls, I singled out specific buyouts and actual events. The aggressive prognostications burned me, largely. Two of my three initial predictions panned out, but I whiffed badly on the additional five calls. In the spirit of full accountability, let's go over my three-for-eight performance this year.

1. Stocks will rise in 2010
After a buoyant 2009 followed a horrendous 2008, calling for a bullish 2010 was no lay-up. This market is a finicky -- and prickly -- beast.

Thankfully, this one worked out well. With one trading week to go before this year is officially in the books, the Nasdaq Composite and S&P 500 are up 17% and 13%, respectively.

2. Sirius XM Radio will gain ground in 2010
After successfully forecasting that Sirius XM Radio (Nasdaq: SIRI  ) wouldn't file for bankruptcy in 2009 -- an easy call looking back, but a gutsy one since even CEO Mel Karmazin would go on to warn of a possible filing in February -- I predicted that the satellite radio giant would reward its shareholders in 2010.

Boy, did it. Shares of Sirius XM more than doubled this year, as healthy subscriber gains and steady profitability in 2010 provided a sharp contrast to the premium radio juggernaut's near-death experience early in 2009.

3. Google will beat gold again
This call worked out well for me in 2009, when shares of the world's leading search engine more than doubled. It has been a bust in 2010, as gold has continued its healthy ascent with Google (Nasdaq: GOOG  ) shares trading slightly lower on the year.

Google itself has performed well. Earnings have grown nicely, and it remains the undisputed global leader in paid search. However, the one-two shot of lofty valuations when the year began and its decision to stage a partial retreat out of China that benefited Baidu (Nasdaq: BIDU  ) kept shareholders away.

Recent fears that Facebook continues to draw eyeballs and advertisers flocking to the Groupon model have also held Big G back.

4. Gold prices will fall in 2010
Adding insult to crystal ball injury, I went on to predict that gold -- and not Google -- would take a hit this year.

Well, that hasn't happened. Gold prices have climbed roughly 25% over the past year.

5. Facebook will go public
I don't know what Mark Zuckerberg is waiting for. Every few months find venture capitalists drumming up higher and higher valuations on the world's leading social networking website. This is great for insiders and early investors, but what about the masses that have made Facebook so popular? When will they get a chance to cash in on the viral dot-com darling?

Facebook's ability to snag top talent from tech giants hinges on stock options that will pay off big one day. There may be an IPO in 2011 or 2012, but it obviously didn't happen in 2010.

6. Netflix will be acquired
I was right about everything that would make Netflix (Nasdaq: NFLX  ) attractive in 2010. The stellar subscriber growth and the fact that it remains the only material player in its streaming niche are huge.

Unfortunately for anyone outside of Netflix investors, the shares have more than tripled in 2010. In other words, the stock's huge run has scared away suitors while also eliminating the urgency for an exit strategy. I still think that Netflix would look good on Amazon.com's (Nasdaq: AMZN  ) arm, but now the trophy wife may be more popular than the potential groom.

7. E*TRADE Financial will be acquired
Sector consolidation in the discount brokerage space took a breather this year. It's a shame, because it seemed as if a larger rival was destined to snap up the E*TRADE (Nasdaq: ETFC  ) Baby.

A new CEO and a reverse split early in 2010 likely silenced the buyout chatter. E*TRADE's first profitable quarters in three years also made it less likely to cave in to possible buyout offers.

8. Apple will go 4-for-4
I nailed the positive runs this year for both Sirius XM and the market in general. Pegging Apple (Nasdaq: AAPL  ) to top Wall Street's profit targets in each of its four quarters in fiscal 2011.

It wasn't even close. The class of Cupertino once again made analysts look like low-balling amateurs.

Quarter

EPS Est.

Actual

Difference

Q1 $2.09 $3.67 76%
Q2 $2.45 $3.33 36%
Q3 $3.12 $3.51 13%
Q4 $4.08 $4.64 14%

Source: Yahoo! Finance.

Wall Street never learns, though hopefully I will when I crank out of my market predictions for 2011 later this week.

What predictions do you think I should make for 2011? Share your thoughts in the comment box below.

Google is a Motley Fool Inside Value pick. Baidu and Google are Motley Fool Rule Breakers selections. Apple, Amazon.com, and Netflix are Motley Fool Stock Advisor recommendations. The Fool owns shares of Apple and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Longtime Fool contributor Rick Munarriz may have his crystal ball bronzed after its 2009 performance, but it cracked badly in 2010. He does not own shares in any of the stocks in this article, except for Netflix. He is also a member of the Rule Breakers analytical team, seeking out the next great growth stock early in its defiance. The Fool has a disclosure policy.


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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 27, 2010, at 11:36 AM, langco1 wrote:

    netflix sees a sharp increase in sales as the harsh early winter conditions keep more people at home.with the depression in america growing worse more people are giving up the high cost of cable and other streaming devices and buying far less expensive netflix instead......

  • Report this Comment On December 27, 2010, at 12:08 PM, nickfinia wrote:

    It sounds like you are telling everyone how your end of the year performance evaluation with your boss has gone.

  • Report this Comment On December 27, 2010, at 12:17 PM, demodave wrote:

    I suspect that AppleTV will also throw a few logs on Netflix fire. My sister got the ATV and loves it. I eagerly await it for my birthday, courtesy of the aforementioned. So go ahead and add another Netflix subscriber. Given the sad state of air radio in Lubbock, TX (but I still listen), might almost expect another Sirius lstener, too. I'm I big fan of 80s on 8 when in a rental car. :)

  • Report this Comment On December 27, 2010, at 5:32 PM, thenatural24 wrote:

    Love the accountability. And unless someone shorted gold on account of your article (you'd have to question their sanity), you made people more money than you lost. Well done Rick.

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