Let me preface my list of investment surprises for 2014 by alerting you that these are in no way whatsoever to be considered recommendations. This list was compiled with the element of surprise in mind so the likelihood of them actually occurring should be viewed as such. In the event of their occurrences, however, each would have obvious investing implications. Here goes:
5 Investment Surprises For 2014
1) Apple (AAPL) unveils a blockbuster and/or revolutionary product that catches the market completely off guard and re-energizes their streak of innovation. Nobody can be sure of the details as Apple plays their cards so close to the vest, but the time has come for something beyond a “thinner and lighter” product, or advances with a TV or watch. Their recent China Mobile deal is crucial, but will pale in comparison to their unveiling in 2014. Apple’s innovation, coupled with an enviable petty cash fund could well lead to something very dramatic as one of the investment surprises for 2014. A subdivision of iHouses? Perhaps an iCar? iRobot? A line of iAppliances? iBank? This time next year, Apple will likely have “the next big thing” that re-captivates their fans attention.
2) 10-year Treasury Bond (TNX) – As the bond currently dances with a 3% yield, this one is obviously counter-trend, but folks, these are meant to be surprises and not predictions made within the context of Wall Street consensus and a career risk-factor built in. Sometime during 2014, the 10-year Treasury trades with a 1 handle. Yes, we are going into 2014 with talk of Fed tapering and signals that the economy has restored growth. This consensus (quite crowded, mind you) view of bond yields rising through 2014 has likely lead to many positions prepared for such. If for any reason an environment develops where the economy doesn’t follow through and consumers retrench, it will very prove very easy for that trend to reverse and we see the 10-year once again trade under 2%.
3) Corn – Are you planting corn this year? I didn’t think so. Farmers are actually storing corn in an effort to not sell at currently depressed prices. I’m no farmer, but my armchair analysis would think this translates into something else planted up to the back porch. Soyburgers anyone? Combined with recent climatic trends and extreme weather, if the Midwest experiences a major drought, torrential rains, or a heat wave for the ages, the stars may align for the price of corn to experience a major price increase at some point in 2014 (maybe even a double) from 2013’s year-end levels.
4) Amazon (AMZN) goes shopping – Don’t expect to see drones flying through your neighborhood dropping off the latest XBOX game, but Jeff Bezos’ 60 Minutes interview tips their hand that they’ve got distribution issues on the brain. Online retailing has evolved quickly and successfully, but Christmas shipping snafus at UPS illustrates how critical these issues still are for online-retailers, especially in light of sharp volume increases and consumer expectations of shorter delivery times. As Amazon adds distribution centers in various states to address these issues, their sales tax-free status has diminished leading to tax collections occurring in at least 16 states, a number that will only climb. As Amazon’s tax advantage disappears, the retailer (finally, the investment surpise!) will make a major acquisition of a bricks and mortar retailer with a wide footprint in an effort to enhance their delivery and return options (and add same day capabilities).
5) QE4 – Perhaps related to #2 a bit, at some point during 2014, this term will emerge, gain traction and show up in headlines. Yes, the Fed announced a “taper”, but I think few would be shocked if they eventually renege on its deployment. Due to economic uncertainties and consumer retrenching during 2014 (obviously an additional surprise), at some point support will grow for Janet Yellen to actually accelerate Bernanke’s pace at the first sign of slowdown. Perhaps a more clever term will emerge, but a new Fed Chair definitely deserves a new moniker for quantitative easing.
Who knows if any of these investment surprises for 2014 will come to fruition. But one thing is for certain: When 2015 comes around next year, there will have been a number of actual occurences in 2014 that few saw coming. And within those “surprises” will be some of 2014’s best investing ideas.
Heart Capital does not offer investment advice via this medium. Under no circumstance whatsoever do these postings, opinions, charts, or any other information represent a recommendation or personalized investment, tax, or financial planning advice.
No position in any of the mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.