Predictions for the Next 24 Months.

So, what do the next two years hold in store for us?  Well, we can never be certain, but I anticipate that the broader market will have a pull back of about 10%-15% starting in the late 3rd quarter or early 4th quarter this year.  The main reason is that companies will start reporting poor numbers for 2nd and 3rd quarter.  This will of course trigger a sell off, but the sell off will be magnified due to investment firms taking profits as I assume they know the broader market is overvalued currently. 

Energy will be relatively flat, with the exception of coal.  Coal has been beated to death, but will start to make a comeback due to foreign markets, especially developing countries.  The reason why coal has been beat up is that it is out of favor with US investors due to new regulations coal's effect on the environment.  The problem with US investors is that their foresight doesn't extend beyond what is going on in the US. 

Oil will remain around $95-$115 and gasoline should stay about the same or possibly tick down a dime or two per gallon.  Natural gas will continue to be very low due to the lack of consumption.  That will change in about 5-10 years, but nothing material will change in the next two years. 

The situation in Europe is only going to get worse, before it gets better.  At least one of the countries in the European Union will drop the euro and go back to their old currency.  I'm better that Spain or Italy will be the first to do so.  The conditions in Europe will aide in the pull back of the broader market.

Interest rates will increase in 2014.  That is an easy one, since the Fed announced that rates will remain low until 2014, unless something changes.  That means that bonds and bond funds will continue to be overvalued and anyone who has investments in bonds, should probably get out completely or reduce their exposure, since bonds have no where to go but down. 

Unemployment will continue to around 8% even if the US economy does grow at a faster rate than it currently does.  Eight percent is the new four percent for unemployment.  Small and start up companies, which create about 75% of new jobs will not be able to grow due to the lack of funding available to them.  People are working longer, so the job turnover will be extremely slow.  Companies have adjusted to the 2008 crisis when they down-sized.  They have learned to do more with less, so most of those jobs that were cut four years ago are not coming back. 

Home prices will increase marginally as we are a good five years away from any significant increase in home prices.  The main reason is that many people are choosing to rent rather than buy.  Also, new college grads are entering a terrible job market and also are trying to manage their student loans, so most will be renting or living with their parents since they won't be able to afford to buy.

So, we are looking not too many positive things that are probably going happen in the next two years.  Not to worry, since there are always solid investments in any market.  Here are the tickers to look into over the next two years.  These are long-term investments and I have positions in all of them except for Waste Management, but I plan on taking a position after the pull back later this year.

WM, DUK, BAC, CHKE, BTU and RSO.