The man who called the market bottom back in March ‘09 reveals two market surprises for 2011.
And one's a whopper.
It’s no secret that Kass tends to be a tad bearish, so you won’t be surprised to hear that he’s a little concerned about the market next year – and his predictions reflect that concern.
Kass tells Fast Money to prepare for a rough ride in the financials.
”I think most notably the SEC comes down in a frontal assault on mutual fund expenses by restricting or eliminating 12b1 fees,” he says.
This prediction isn’t the whopper - in fact it's not terribly dramatic at all. SEC Chair Mary L. Schapiro has already said she favors making changes in this area.
However Kass isn't shy about telling us which asset managers he thinks will get hit the hardest. He’s bearish T Row Price, and Franklin Resources which he predicts could be "some of the worst performing stocks in 2011.”
(In case you're wondering, 12b1 fees allow funds to charge investors with marketing costs. The mutual fund industry collected about $9.5 billion through 12b-1 fees last year.)
This one's the jaw-dropper.
Kass thinks terrorists send investors scrambling – not with guns or bombs but using the Internet as a weapon. He tells the desk “I believe cyber crime is going to explode exponentially next year as the web is invaded by hackers.”
And he thinks they target the foundation of capitalism.
”I think we see a specific attack on the NYSE,” he says. “The aftermath will have a profound impact and cause a week-long hiatus in trading as well as a slowdown in travel.” Yup, you read that right – a week long hiatus in trading.
How do you prepare for something like that?
”I’d make sure to have a large amount of cash in my portfolio,” he says.
We know that's a rather startling prediction, and in all fairness Kass divides his predictions into 2 categories possible and probable. Although he didn't say, we're guessing this one lies squarely in the possible (but not probable) category and investors should take it with a grain of salt.
However, when Kass 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.
MARKET INTO YEAR END
And in case you’re looking for a little information that's more immediately tradable Kass reminds the desk that although he respects Mr. Market he’s a skeptic of the rally.
”I’m less certain than the consensus that the economy is moving toward profitable and self sustaining growth,” he says. “I mentioned a few weeks ago that I think the market has topped for the year and I continue to see that.”
In fact he revealed that skepticism on Fast Money back on Monday November 8th.Click here to go to Kass: The Market Has Hit the Top
Got something to to say? Send us an e-mail at firstname.lastname@example.org and your comment might be posted on the Rapid Recap. If you'd prefer to make a comment, but not have it published on our Web site, send those e-mails to email@example.com.
Trader disclosure: On November 22, 2010, the day this video was recorded, following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Adami Owns (AGU), (C), (NUE), (MSFT), (INTC), (BTU), (GS); Weiss Owns (MEE), (TSN), (QCOM), (JWN), (UAL), (CYT), (DIS); Weiss Is Short (UNH) Calls; Weiss Is Short (LCRX); Finerman's Firm Is Short (IJR); Finerman's Firm Is Short (MDY); Finerman's Firm Is Short (SPY); Finerman's Firm Is Short (IWM); Finerman's Firm Owns S&P 500 Puts; Finerman's Firm Owns Russell 2000 Puts; Finerman Owns (AAPL); Finerman Owns (BAC); Finerman's Firm Owns (GENZ); Finerman's Firm And Finemran Own (HPQ); Finerman's Firm And Finerman Own (JCG); Finerman's Firm Owns (JPM) Leaps, Finerman Owns (JPM); Finerman's Firm Owns (SKS); Finerman's Firm Owns (TGT); Finerman's Firm Owns (WMT); Seymour Owns (AAPL), (BAC), (INTC), (IPI), (POT), (HPQ); Jon Najarian Owns (SNDK); Jon Najarian Owns (AKAM); Najarian Owns (CRUS), Is Short (CRUS) Calls
GE Is The Parent Company Of CNBC
NBC Universal Is The Parent Company Of CNBC
For Brian Kelly
Accounts Managed By Kanundrum Capital Own (C)
Accounts Managed By Kanundrum Capital Own (FCX)
Accounts Managed By Kanundrum Capital Own (GLD)
Accounts Managed By Kanundrum Capital Own (POT)
Accounts Managed By Kanundrum Capital Own (XLF)
Accounts Managed By Kanundrum Capital Own (SLV)
Accounts Managed By Kanundrum Capital Own (JJG)
Accounts Managed By Kanundrum Capital Own (IEF)
Accounts Managed By Kanundrum Capital Own (EWH)
Accounts Managed By Kanundrum Capital Own (XLK)
Accounts Managed By Kanundrum Capital Own (SMH)
Accounts Managed By Kanundrum Capital Own (XBI)
Accounts Managed By Kanundrum Capital Own (RTH)
Accounts Managed By Kanundrum Capital Own (SLX)
For Mike Khouw
Cantor Fitzgerald Is A Market Maker In (GMCR)
For Doug Kass
For Youssef Squali
Jefferies Is A Market Maker In (NFLX)
For Alan Zafran
CNBC.com with wires.