The 5 Worst Predictions for 2015

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Around this time last year, here were some of the common predictions for 2014: Interest rates would rise (in reality, they fell). Oil prices would surpass $100 per barrel and stay there (latest price: around $54). Apple’s iWatch would be the killer product of the year (it’s not out yet). And the stock market rally would stall (stocks are likely to end the year up a frothy 13% or so).

Meanwhile, virtually nobody predicted the rise of the Islamic State, the deadly toll of Ebola, the worst year for aviation safety in decades or the remarkable 46% drop in oil prices.

Predicting the future is a fool’s errand, of course, but that doesn’t stop self-appointed seers from doing it anyway--and many others from wagering real money on trends that may or may not materialize. So I reviewed dozens of predictions for the next 12 months and winnowed them down to a few commonly repeated one that are pat, naïve or simply wishful thinking. Here are my picks for the worst predictions for 2015:

It will be a breakthrough year for wearable technology. The iWatch should finally make its debut, with dozens of cheaper smart watches and other wearable gizmos already on the market. Just because Apple (AAPL) rolls out a wearable device, however, doesn’t mean the idea is a winner. Sure, there will be some takers who really need to strap a glorified iPhone to their wrist. But the usefulness of another costly device that’s basically an extension of your phone still isn’t obvious. Google (GOOGL) Glass was supposed to be a breakthrough product by now, but the few trons who wear it have failed to incite the mass-market face-computing craze true believers still think is coming. Okay, so a wearable computer will seem more natural on your wrist than on your face. Sure.

The Internet of Things will begin to dominate. There probably will come a time when digital devices communicating with each other will allow homes, cars, refrigerators and many other products to operate like a symphony of smart living because they know when and where we need to use them. But one big problem stands in the way: hackers. Connecting different elements of your home and other products you use to the Internet—a prerequisite of connected living—creates a big new security vulnerability most consumers haven’t begun to grapple with. Few device manufacturers have, either. Given how much trouble huge corporations like Sony (SNE), Apple, Home Depot (HD), Staples (SPLS), J.P. Morgan Chase (JPM) and Target (TGT) have had with hackers, how are ordinary people supposed to contend with them? Memo to Silicon Valley: hackers pose the biggest threat to the digital economy since its invention. Please fix.

Gasoline prices will be [?]. They might drift below $2 per gallon, or rocket up to $4. Nobody knows! But forecasters still have to guess. The smartest way for consumers and investors to cope with volatile energy prices is to enjoy the windfall when they're unexpectedly low, but expect oil and gas to return to higher trendlines over time. If you overestimate future energy costs, it just means more of a windfall down the road.

Corporations will take on governmental roles. Since Washington, Brussels and other governing capitals can’t get anything done, the thinking goes, corporations that know how to solve problems will begin to get involved in civic matters such as fixing roads, funding schools and managing public health care. Let’s hope it doesn’t happen. Corporations exist for one explicit purpose—to earn money—and there’s nothing wrong with that. Corporations are also adept at gaming the political system for their own advantage, through customized tax breaks, regulatory rollbacks and any other favors they can beg or buy from politicians. Purchasing the naming rights to every stadium in America seems like enough civic involvement for big business. If government doesn’t work, we should fix government through means that exist for that purpose (uh, elections) instead of seeking alternatives likely to be worse.

The stock market will be sanguine in 2015. With the economy stronger than it's been in years, consensus forecasts call for a gain of 10% or so for the S&P 500 by the end of 2015. Of course it could happen, with the long bull market that’s risen about 200% since 2009 adding a few more points to its impressive tally. But the end of the rally has to come at some point and there are plenty of things that could trigger it in 2015: severe knock-on effects from the plunge in oil prices, the beginning of interest-rate hikes by the Federal Reserve, a full-blown economic crisis in Russia or something nobody is contemplating right now. It’s true such risks have been more or less a constant for the last five years, with the markets shrugging them off. But that has bred complacency and drawn a lot of late money into stocks. It can’t last forever.

There are also some thoughtful predictions for 2015 that bring fresh ideas to this annual, year-end festival of groupthink: General Motors will wow consumers with amazing new products and features, after a dreadful year dominated by shameful safety scandals. Amazon (AMZN) and Walmart (WMT) will become big players in the health care business. Russian-style nationalism will be a resurgent geopolitical problem. And 2015 will be the year you, the typical consumer, get seriously hacked.

There’s one other prediction that’s the easiest to make of all. Something unforeseen, and absent from every prediction list, will end up being the biggest story of 2015. Just as it is every year.

Rick Newman’s latest book is Rebounders: How Winners Pivot From Setback To Success. Follow him on Twitter: @rickjnewman.

[readon1 url="http://finance.yahoo.com/news/the-4-worst-predictions-for-2015-170444491.html"]Source:finance.yahoo.com[/readon1]

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