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"BEST" of New Year 2019!

Happy New Year to all. Finally 2018 is over and hopefully new year of 2019 would bring some much needed calm and sanity to the world of politics, economy and markets! 2018 ended as worst year for investing since great recession of 2008. While I have written about 2018 to be similar to 1998, it turned out to be worse than expected. Looking back at my recommendations at start of year, it turned out to be one of the worst year of recommendations. Let's take a look at it briefly.
  • Overall returns were negative high double digit percentages (compared to negative 6.2% for S&P). 
  • Only 6 out of 18 recommendations did better than market
  • Best performers were NTNX, RGNX and QURE
  • Worst performers were SN, NLNK and GE. The last one (GE) was real surprise. I never expected GE to be down by 57% in 2018.
So overall it was quite dismal performance. It would have been better to just invest in S&P instead. But that was last year. The Q4 market turmoil has left many stocks at "discounts" and I cannot resist the temptation of coming up with my 2019 list of 20 recommendations. In the world of acronyms, let's call 2019 theme of recommendations as "BEST" - Biotech, Energy, Streaming/Social/Semi and Technology! And here are the recommendations:
  • Biotech: NKTR ($33), VKTX ($7.50), CRSP ($28), CELG ($64), XBI ($71)
  • Energy: RIG ($7), OAS ($5.5), ECA ($5.7), XLE ($57)
  • Social/Streaming/Semi: FB ($130), NFLX ($260), DIS ($109), MU ($31), AMD ($18), ROKU($30)
  • Technology: AAPL ($155), MSFT ($100), ZUO ($18), WDC ($36), AMAT ($30)
Let's see how these BEST recommendations do in 2019. It will all depend on how markets do and that depends on following factors:
  • Direction of US interest rates 
  • US/China Trade 
  • GDP growth of world economy
  • Regaining of Trust by tech companies (especially FANG)
  • Establishing confidence in banking/financial institutions (that it's not 2008/2009)
  • Sanity to world political landscape
If 2018 indeed mimics like 1998 or even 2008, there is silver lining since both 1999 and 2009 had 20% plus returns! Here are my market predictions:
  • 1-2 more Interest rate hikes by FED. 
  • 10 year treasury would hover around 2.75 to 3.25
  • US GDP growth: 2 to 2.5%
  • US unemployment rate: 3.5 to 4.5%
  • S&P by end of 2018: 2750 to 2850
Happy New Year!
/Shyam

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