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2010: Predictions and High-Beta/High-Alpha Stocks

Happy new year to all of you and your families ! Hope you had a great new year party.

Now that we are starting a new year and new decade, it's time to look forward and get ready for what's in store for 2010 and this decade. Here are some macro predictions which I assume would form basis of my investment ideas and recommendations:

For year 2010:
  • At end of year 2010: DOW: 11500 to 12000; S&P: 1220 to 1250: Nasdaq: 2500-2600
  • US GDP growth for 2010: 2.5 to 3.5%; Unemployment rate: 8-8.5%
  • Fed interest rate: 1-2%
  • Oil: $75 to $90; Natural Gas: $5 to $7
  • BRIC stock indexes: Up by about 15-20% from 2009 levels with economies growing between 5% (Russia/Brazil) to 9% (China) - India would be somewhere around 8%
Now that we just had one lost decade for developing economies, new decade should bring some cheer to investors (similar to 1980s after stagnant returns of 1970s).

Here are some stocks which I think has 50% upside potential. Caution: Most of these stocks would also have 50% downside potential if things do not turn out to be as expected. So be cautious while investing and only if you can stomach the volatility which comes with these high beta stocks.
  1. Sprint (S): $3.66
  2. Citigroup (C): $ 3.31
  3. Bank of America (BAC): $15.06
  4. Allied Irish Bank (AIB): $3.51
  5. Conseco (CNO): $5.00
  6. Crosstex Energy (XTEX): $8.60
  7. SFI-Preferred (SFI-D): $7.39
  8. Fortress (FIG): $4.45
  9. The PMI group (PMI): $2.52
  10. Hero Offshore (HERO): $4.78
These stocks are some of the high-beta/high-alpha stocks. With proper due-diligence and right timing, one should be able to generate S&P beating returns in 2010.

If you have not seen Avatar, it's must see movie (in 3D). If you are into Hindi movies, 3 idiots is good movie (but has some awkward moments if you are planning to see it with kids)

Happy investing and have a great weekend !

/Shyam

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