I don’t have any fancy ways to make market predictions. I’m a simple trend follower.
Like every year, some trends of the last 1,3 and 5 years will continue, some will stall and some will reverse.
I think my favorite stock chart of 2019 is Tesla and I never traded it. The stock went into it’s largest ever drawdown this summer only to close yesterday at -all time highs:
Im not sure the lesson here other than a lot of ‘smart’ people were short the stock and have been crushed. It is hard to bet against products that are loved.
Remember all that recession chatter this summer? I do. It is why I don’t read news and watch business TV.
Today, Steelcase is at all-time highs. Steelcase “Manufactures and sells integrated furniture settings, user-centered technologies, and interior architectural products”. As Ian, who shared the chart puts it (sarcastically), …’An office furniture stock breaking out to a two-decade high just kinda feels non-recessionary to me. Maybe I’m wrong”:
Now that we can all agree that NOBODY KNOWS what the hell will happen next year, let me share a few predictions.
1. The Nasdaq will get to my coveted 10,000 at some point in 2020. I think there are a lot of strong software and technology companies to get public next year and the backdrop for a rising market remains strong with low interest rates and an impeached President who needs a higher market and is on one hell of a lucky streak.
2. Mega Mergers continue. Energy has spent a decade underperforming so that is one sector that should see them. In the financial services space, TD and Schwab are just the beginning of what will be some giant marriages and in software/tech I am in agreement with Thomas Tunguz who laid out some stats (here are his 2020 predictions as well)…
The M&A market continues to surge. Software M&A in 2019 reached about $170B up from $136B in 2018, up 25%. With SaaS penetration roughly 20-30% by our estimates, there’s several hundred billion in market cap to be created in the next few years. And incumbents desire as much of that as possible for themselves. I’ll guess a 15% increase from here or about $200B.
3. I don’t think Direct Listings are a thing at least in 2020. The creeps at JP Morgan and Goldman are flush and will promise whatever it takes to make 2020 a year of traditional IPO’s. To read up on Direct Listings, which do seem inevitable, this piece by Thomas Tunguz is excellent.
4. Shopify will become a $100 billion company. I have been long the stock for a long time. The company seems to have the right platform and attitude to double once again (assuming the markets play ball). I love this answer from their CEO Tobi on how they think of themselves versus Amazon:
I get this question a lot, the press loves it. I’m not thinking about it like this. Amazon sells things. Shopify doesn’t. We work well together. We have an Amazon channel. We offer Amazon pay for the merchants who want it, and if anything, Amazon is trying to build an empire and Shopify is trying to arm the rebels.
This is an excellent (longish) read on all things Shopify.
5. One counter trend idea I will share is that the rest of the world does play some catch up to the US with respect to stock market returns.