Prediction: 2011

Another volatile week in world stock markets. Bailout in Europe leads to an excuse to cover short positions and a snap-back rally the first part of the week. This gave those of us who see a correction materializing the chance to get out of any long positions and re-position for the sell-off that is coming. A lot of world markets and many commodities are looking very weak right now. I wouldn't want to be long anything at the moment, other than gold, silver, and the U.S. dollar.

But that is the short term outlook. In the longer term, I see serious roadblocks and hazards emerging in the next 6 months and beyond. This will lead to the realization toward the end of this year that we are not out of the woods yet--not even close. 2011, unfortunately, will be ugly. I have zero faith that this recession is truly over, although many will have you believe that. "Time to buy back in, catch the train before it leaves the station, load up your mutual funds." It makes me ill when I hear such poor advice. Unless you are loading up on precious metals, don't bother. Stay in cash, sell and take profits--get out of the market by the end of this year, or you could see your positions cut in half in 2011. Yes, that's right, I said cut in half!

The market is not the place to be. Not the U.S., not China, not Europe, not Brazil. Not right now and not until the recession is truly over. If you read the next two posts, you'll see that I don't expect that to happen until the end of 2012 or even 2013. Do yourself a favor and let everything play out before you buy back into this market. If you've made a profit or recovered some losses in the past year's rally, good for you! Take profits, open up a money market account, buy a CD even though you're only making a couple percent. Do anything, just don't keep your money in the stock market--any stock market!

2011 will be rough. If there is going to be a market "crash" or major sell-off in the next three years, I believe it will occur in 2011. I have no confidence that it will take that long, though, and I would guard against a 2010 crash as well. Don't listen to the news. Don't believe the media's claim that the recession is over. Do not buy back in now. It's too late--this rally is over and 2011 is looming. Fear is an emotion that sometimes can't be trusted when it comes to investing. Right now it's time to trust your fear.