We know what you’re thinking… we shouldn’t have been startled.
All month long Kass, a widely followed strategist and president of Seabreeze Partners, has been revealing new surprises from his annual list of Surprises for 2011 on CNBC’s Fast Money.
The latest follow.
SURPRISE #9
Looks like gold bugs are about to encounter some pretty strong insecticide in the guise of falling prices.
Looks like gold bugs are about to encounter some pretty strong insecticide in the guise of falling prices.
"My first forecast is contrary to the high price forecasts by many of the brokerages," he says.
Next year Kass expects the price of gold to plunge $250 an ounce in a 4 week period with gold counted among the worse performing asset classes in the new year.
Sure you can point to a slew of catalysts to take gold higher (deflation, inflation, peace, turmoil) but Kass thinks another catalyst trumps all others– too many bulls and not enough bears.
”The price of gold has risen from about $250/oz eleven years ago to about $1370/oz today - compounding at over a 16% rate annually,” he tells our producers ahead of the broadcast.
Sure you can point to a slew of catalysts to take gold higher (deflation, inflation, peace, turmoil) but Kass thinks another catalyst trumps all others– too many bulls and not enough bears.
”The price of gold has risen from about $250/oz eleven years ago to about $1370/oz today - compounding at over a 16% rate annually,” he tells our producers ahead of the broadcast.
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"As a result, investing in gold has become the sine qua non for hedge hoggers and other institutional investors - and in due course gold has become a favored investment among individual investors."
Simply stated gold has become a crowded trade. "Wide prices swings are what to expect in 2011," he counsels.
SURPRISE #10
J Edgar Hoover’s pursuit of John Dillinger may look like small potatoes when compared to this next surprise.
According to Kass, expect an insider trading probe that ends with a quite a sting, the likes of which Wall Street probably has never seen.
He says that next year, “several well-known long-only mutual funds (will be) implicated in the sting, which reveals that they have consistently received privileged information from some of the largest public companies over the past decade.”
J Edgar Hoover’s pursuit of John Dillinger may look like small potatoes when compared to this next surprise.
According to Kass, expect an insider trading probe that ends with a quite a sting, the likes of which Wall Street probably has never seen.
He says that next year, “several well-known long-only mutual funds (will be) implicated in the sting, which reveals that they have consistently received privileged information from some of the largest public companies over the past decade.”
The consequences, he says, will be widespread and severe.
Expect, “the largest hedge and mutual funds, to go into temporary lock down mode as the hedge fund community's trading activity freezes up.”
"That's going to hurt companies like Morgan Stanley [MS 26.26
0.02 (+0.08%) 
], Goldman [GS 166.05 2.01 (+1.23%) ] and the Merrill Lynch unit of BofA [BAC 12.62 0.05 (+0.4%) ]," he tells the traders.
Expect, “the largest hedge and mutual funds, to go into temporary lock down mode as the hedge fund community's trading activity freezes up.”
"That's going to hurt companies like Morgan Stanley [MS 26.26
0.02 (+0.08%) ], Goldman [GS 166.05 2.01 (+1.23%) ] and the Merrill Lynch unit of BofA [BAC 12.62 0.05 (+0.4%) ]," he tells the traders.Yes, we realize this prediction is a little over the top. We also realize that Kass is known to lean toward the bearish side and both of these predictions reflect that pessimism. In fact almost all of his Surprises for 2011 have been negative.
But when Doug speaks, we listen -- largely because he’s had an uncanny track record for being right.
But when Doug speaks, we listen -- largely because he’s had an uncanny track record for being right.
Less than a week before the S&P 500 hit a generational low of 676 on March 9, 2009, Kass went on CNBC and predicted the bottom. Also, on July 6, 2010, he said the market had made its lows for the year and so far, that has also proved to be true.
And when we asked him on December 20th if he was growing ever more skeptical of the rally he told us "I'm getting increasingly bearish, yes."
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