I don't know if you're glued to the presidential primaries, tracking the debacle that is Britney Spears' life, or actually taking the time to monitor your portfolio, but I for one can't pry my eyes off the market volatility we've been treated to through the first few trading days of 2008.
I already sent four market predictions your way last week, but I find that my crystal ball just isn't done prognosticating. What can I say? I never could find the kill switch on that thing.
So in no particular order, let me go over a few of the financial news events that I see going down this year.
1. E*Trade will find a suitor
There's a lot of upbeat talk from the E*Trade (Nasdaq: ETFC) camp these days. The brokerage-account defections have stabilized. Shares rose yesterday after E*Trade sold another batch of its worrisome mortgages, this one worth $3 billion. It has an aggressive program in place to win back clients.
I get that. I've even spoken in favor of clients giving E*Trade another shot. However, E*Trade's shares have continued to slide through all of this, leading me to believe that a rival broker is eventually going to wipe the drool off its chin and acquire E*Trade's retail brokerage business.
As long as it's done in a way that ensures the acquirer isn't perceived to be taking on any of the brand-denting fears of problematic loans, E*Trade should even command a hearty premium.
2. The January Effect will be the January Defect
It's been said that as January goes, so follows the market. A healthy first month for stocks is historically a precursor to a healthy year. I think this year will break from the plan.
Realistically speaking, stocks are off to a bad start in 2008. Even with yesterday's spunky bounce, the S&P 500 has lost 4% of its value so far this month. There are enough recessionary whispers and finance-related collapses to keep a dark cloud over the market in the near term. I just don't see that negativity sticking around for all of 2008. I still believe that this will be a historically superior year, but the headier gains will come later rather than sooner.
3. The CEO bloodbath is just beginning
There were too many prolific underperformers last year. This has been a dangerous week to be in the CEO office -- especially at companies like Starbucks (Nasdaq: SBUX) and Bear Stearns (NYSE: BSC) -- but we're really just starting to scratch the surface.
As distressed companies gear up for their annual reports in a few months, angry shareholders will demand change. And they'll get it. I'm not going to name names like I did last year (when I got all four right, by the way), but CEOs will be an endangered species, especially in hard-hit sectors like real estate, retail, and financial services.
4. Google will finally get to double down on DoubleClick
Google's (Nasdaq: GOOG) $3.1 billion purchase of DoubleClick has passed stateside scrutiny but now has a tougher test overseas. Yes, the world's leading paid-search player will get bigger with a display advertising juggernaut like DoubleClick, but who is going to stop it when some of Google's biggest critics have been snapping up Web search companies like crazy?
The acquisition was announced nine months ago. Let's get this baby out there.
5. Amazon will continue to grow faster than the e-tail market
It's hard to tell what part of the Amazon.com (Nasdaq: AMZN) story is more amazing: the fact that revenue growth has actually been accelerating through most of the past two years, or the fact that a company as big as Amazon is actually growing faster than the e-commerce market as a whole.
It's true. Now that comScore has pegged this past holiday shopping season's growth spurt at an impressive 19%, we can bow before Amazon. The leading Web-based retailer is looking for top-line growth in the 28% to 37% range, and it may have topped its own guidance after a robust holiday push.
I see the growth rate at Amazon finally decelerating in 2008. The bar is just too high. Still, I see Amazon growing faster than the e-tail market as a whole. Well done, Amazon.
6. Yahoo! will beat the market
One of the dot-com world's biggest clunkers over the past few years has been Yahoo! (Nasdaq: YHOO). Even though I stand by my prediction that it will join forces with Microsoft (Nasdaq: MSFT) later this year, I'll go with a Plan B prediction here and say that Yahoo! will finally beat the market averages in 2008.
It may not close out the year with Jerry Yang at the helm. "CEO Sue Decker" is starting to have a nice ring to it. However, no matter who is ultimately leading the company, its financials will improve in comparison to a sandbagged 2007 performance. The company just has too many cool appendages, like Flickr, Yahoo! Answers, and a 40% stake in China's Alibaba, to be picked on forever.
So these are my predictions for 2008, and I'm sticking to them!
