What Will Happen in 2008

decisions.jpgYes, it’s time for our list of predictions for 2008.

Economy. GDP growth in the United States will slow to 1.5%, prompting an annoying number of articles on the decline of the US and lots of analogies to the Roman Empire. The Fed will bring discount rates all the way down to a futile 4.25%, in an attempt to put out an economic grease fire with a fiscal bottle of Evian. Which, as everyone knows, spells “naive” backwards. Oil will pull back a bit before rocketing to $120/barrel, and inflation will remain as “contained” as it is now – which just means we will continue to pay $5.00 for a half gallon of organic milk in Manhattan. Jobs will decline, unemployment will rise, the trade deficit will increase, and nothing in particular will be done about it, since we have an exceedingly lame-duck administration in office and it is an election year.

Politics. Obama will win the Democratic nomination, and will tap either Richardson or a current unknown as VP. Obama will be the next President. Huckabee will be enough of a thorn in the early primaries to cause: a) Bloomberg to enter as an “independent” (read: the wannabe establishment candidate) and b) Romney to get the nomination as the actual Republican establishment pours cash into his campaign out of sheer panic. One of the worst presidencies in US history will draw to a close, and our long national nightmare will almost be over.

[UPDATE 1/6/08] After watching the debate last night, and chatting with some friends over brunch today, I have to change my VP pick: it’s obvious that Edwards is auditioning for the job, and it seems much more likely that Obama will pick him over anyone else.  Edwards has everything to gain by taking this route, since his policies are more revolutionary than those of any of the other major candidates – he’s young enough that waiting 8 years for another shot at the title isn’t a big deal, plus as VP of the Obama administration, he’d be the default candidate.

Society: An alarming number of US citizens will continue to believe that the planet Earth was created in 6 days, and science literacy in general will only get worse. True literacy – the sort that excludes instant messaging, Twitter, Facebook, Time magazine, and any media owned by Rupert Murdoch – will also decline. Public health will improve slightly as insurance companies and HMOs slightly expand benefits in order to stave off the inevitable and much-deserved onslaught coming their way in 2009. Soccer (“Football”) will not gain any increased popularity or market share in the US, despite the presence of David Beckham. Celebrity gossip will continue to substitute for actual news coverage in the corporate-owned media. ClearChannel and the RIAA will continue to be their own worst enemies. The writers strike in Hollywood will have an interesting impact on the film industry.

buy and hold will be a losing propositionTrading: Almost forgot! Volatility will stay in the 20-25 range for most of the year. The next bear market will get off to a fantastic start, and long stock traders will have no place to hide – well, except for those ultrashort ETFs. All those Chinese grandmothers who used their life savings to open stock accounts on the Shenzhen and Shanghai exchanges will squint jealously at our ability to short stock and trade options. Retail investors will waste that ability by continuing to buy RIMM and BIDU calls naked. ISE will take more market share from the CBOE and human traders on the exchange floors will continue to dwindle. At some point CNBC will stop going down to the NYSE floor because of all the tumbleweed. Hedge fund growth will have peaked in 2007. Cramer will have peaked in 2007. ETF growth will peak in 2008, and “orphan” ETFs will become a real problem.

Condor Options will have to stop accepting new members completely at some point, as you guys are sucking up some real volume now and we don’t want to make our trades illiquid.

Abby Joseph Cohen will remain bullish.

[tags] 2008, predictions, elections, markets, society, trading, options, China, inflation, GDP, ETFs [/tags]


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  1. 2008 January 06 | Condor Options: Iron Condor Trading Newsletter Says:

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    [...] our list of predictions for 2008, we claimed that “buy-and-hold will be a losing proposition,” and unfortunately [...]

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