Monday, January 2, 2012

Econ 101 from Repro 101: Report on Predictions Made on May 21, 2011

On May 21st, 2011, I put up a post on Reprographics 101 titled, “Economics 101 from Reprographics 101.” In that post, I made 10 predictions. Note that all of my predictions were based on the “SWAG” (silly-wild-ass-guess) method. Today, I’m going to revisit those predictions to see how close I came (or to see how far off base my predictions were.)

Black type > the predictions I made on May 21st, 2011.

Red type > today’s update on those predictions.

1. On December 31, 2011, the S&P 500 will be between in the 1,150 to 1,200 range. (Today, it’s right around 1,334.)

Update: at market close on December 31st, 2011, the S&P 500 Index was 1,218.

2. On December 31, 2011, the average interest rate for a 30-year fixed mortgage will be 5.50% (zero points.) (Today, reports that the current average interest rate is 4.77% (zero points, 20% down)

Update: On December 31, 2011, the average interest rate for a 30-year fixed rate mortgage was 3.95%.

3. On December 31, 2011, the yield on the 30-year U.S. Treasury bond will be 4.85%. (Today, Google Finance reports that the current yield on the 30-year U.S. Treasury bond is 4.31%.)

Update: at market close on December 31st, 2011, the yield on the 30-year U.S. Treasury Bond was 2.89%.

4. On December 31, the Euro/USD exchange rate will be 1.31. (Today, Google Finance reports the Euro/USD exchange rate at 1.415.)

Update: at market close on December 31st, 2011, the Euro/USD exchange rate was at 1.2942.

5. For the full-year 2011, ARC’s U.S. Sales will come in at right around $384 mil. (In an article on this blog on March 10, 2011, we included a table that showed ARC’s “U.S.” Sales at $676.7 mil for 2008, at $473.4 mil for 2009, and at $404.5 mil for 2010.) Please note that these numbers exclude ARC’s sales in countries outside the U.S. And, please note that my prediction for ARC’s “U.S.” Sales are based on “organic” sales; and I point that out because ARC may decide to acquire a few companies during the 2011 year, and there’s no way for me to guess at what “acquired” sales ARC may end up adding to its U.S. Sales.

Update: We won’t be able to provide an update on this prediction until ARC files its 10K report for 2011, which won’t happen until around mid February (or mid March) 2012, and that’s because ARC does not disclose its “U.S.-only” sales until the 10K report is published.

6. ARC’s stock price will be $8.20 on December 31, 2011. (Note: On May 20, 2011, at market-close, ARC’s stock price was $8.76 per share.)

Update: at close of market on December 31, 2011, ARC’s stock was trading at $4.59 per share.

7. The AIA ABI Index – for May, June, July, August, September, October, November and December (2011), will be above 50 in four of those months and equal to or below 50 in four of those months. (Up down, up down.)

Update: As to May 2011 through December 2011, right now we still have one month to go because the December 2011 index won’t be reported until the middle of January 2012. However, so far, the ABI Index was at or above 50 for only 2 of the last 7 months and below 50 for 5 of those months.

8. The NAHM Home Builder’s sentiment index will be 20 in the month of November 2011. (The index was 16.0 in May 2011)

Update: the Home Builder’s sentiment index in November was at 20.0. The index reading in December was at 21.0

9. The U.S. GDP number for year 2011 will come in at +2.4% (for the full year 2011).

Update: Sorry, we will not be able to update you on this prediction until the government issues this number (the annual growth rate number), which will likely be a month or two from now. For now, we can report that the GDP growth rate was .4%, 1.3% and 1.8%, respectively, for Quarters 1, 2 and 3 in 2011.

10.The officially reported U.S. Unemployment number reported in December 2011 will be 8.8%. (The unemployment rate reported for April 2011 was 9.0%)

Update: The officially reported U.S. Unemployment rate reported on December 4th for November was 8.6%. We won’t know the official growth rate for December 2011 until sometime in mid-January 2012.

- - - - - - - - - - - -

Joel’s comments:

Well, based on the “actuals”, so far, readers can now see clear evidence of why I barely passed Econ 101 in college!

My SWAG at the S&P 500 Index wasn’t far off, and, inasmuch as did over 200 short-term trades in 2011 and relied on my projection that the S&P 500 would move lower from the 1,334 number it was at when I prepared my list of predictions, I did fine, but that’s only because the market swung up and down, lots, during 2011 and I managed to catch most of the ups and avoid most of the downs. My disaster of the year was Bank of New York Mellon. Although analysts “say” that that stock has a fair value of around $50 per share, that stock plunged during the latter part of 2011 and, like the idiot stock trader I am, I held onto it ….. waiting, waiting, waiting. However, in spite of that, I managed to eke out a “total return” of approximately 14% for 2011. (Dividends plus gains, minus losses.)

As to interest rates, well, I was waaaaay off the mark on my predictions of the 30-year fixed mortgage rate and the 30 year U.S Treasury Bond yield. That’s mostly because the Fed Reserve continued – and even strengthened – its policies to keep down, if not further lower, interest rates. [I hope some of you refinanced this year, the rates are ridiculously low. And, I hope some of you bought long (10 and 30) year Treasury bonds early in 2011, because Treasury bonds were evidently the big winner (in terms of total return) for the year 2011.]

My prediction of the Euro/USD exchange rate was very close! Unfortunately, I was in France and Spain in September and the Euro/USD exchange rate was much higher then than it ended up being at the end of 2011. I have to learn how to better time our trips to Europe.

I was well off the mark on my prediction of ARC’s stock price! Not much I can say about that. I think Stadium Capital – the investment company that acquired a huge chunk of ARC stock during 2011 – must have acted on my prediction. Sorry about that.

As to my prediction about the AIA ABI Index, even though that story ain’t yet over, my prediction isn’t going to make it. I really was expecting to see at least four 50+ months out of the last eight months of 2011. If December’s index reading comes in plus 50, that’ll make 3 50+ months out of the last eight months of 2011. In spite of that, I still believe that we are going to see a rise in A/E/C Industry activity during 2012. After all, how long can conditions continue to be awful? There has to be a good amount of pent up demand.

I did “nail” the Home Builder’s sentiment index, right on. But, even at 20 and 21, respectively, for November and December, that index is still way below 50. That’s not exactly an expression of robust positivity about the near-term outlook for home building.

Like almost every economist, my prediction of the U.S. GDP growth rate for 2011 will be well off the mark. Early in 2011, the majority of economists were predicting that the GDP growth rate for year 2011 would come in around 3.0%. Inasmuch as it now looks like that rate will come in somewhat lower than 2.0% (and, to hit that, it relies on a fairly strong Q4, which, some say, did not happen) what does that say for the “expert” economist community?

My prediction of the U.S. Unemployment rate wasn’t far off. But, considering the fact that the real unemployment rate is probably a good bit higher than the rate reported by the government - (people have dropped out of the employment market because their unemployment ran out and they still can’t find a job, so some have stopped looking for work) – who really cares what the “official” unemployment rate really is? Let’s get Americans back to work with an infrastructure / development, jobs creation program!

Okay, that’s it for my comments about the predictions I made on May 21, 2011.

No comments:

Post a Comment