What Investors Can Expect In 2014

Last year I made 10 predictions for 2013. Some were bolder than others. As always, I promised to review these at the end of the year and give myself a score card. The first five predictions made on December 11, 2012 were:

1. U.S. GDP growth would remain tepid in the first half of the year, before picking up to a near 3% rate during the second half.

2. Stocks will be very volatile in January and through the first quarter, but thereafter should regain their upward momentum to allow the S&P to gain about 6% in 2013.

3. Average gasoline prices in the U.S. will rise above $4.50 by Memorial Day.

4. Europe will remain in recession for most of the year, ultimately forcing a Greek exit from the currency zone.

5. Housing drops again, after banks release a large chunk of their foreclosure inventory onto the market. This should be temporary.

By my count I'm 3.5 for 5.

In fact, I was modest in my first two predictions: U.S. GDP growth grew 3.5% in the third quarter and the S&P has gained 26.40%, year-to-date.

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Gasoline did not rise as I expected and national average for gas prices Memorial Day 2013 were about the same as the 12 months prior, $3.66/gallon (although they did spike to all-time highs in the Midwest and California due to refinery outages). The current U.S. average is $3.28/gal.

Europe did remain in recession for most of the year, although after much speculation Greece didn't exit (the so-called "Grexit.")

The median home price did plunge mid-year before rising again by 12.8% in October from a year ago.

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My first five predictions for 2014 are:

1.  The Fed will continue Quantitative Easing (QE) at an annual pace of $750 billion through the year.

2. Consumer Price Inflation (CPI) will remain below 2%.

3. The unemployment rate will drop to 6.5% by year-end.