Predictions 2011

Predictions 2011: Herb Greenberg On Stocks And Companies


1. For-Profit Colleges

Watered-down gainful employment rules get implemented by the Education Department, but the impact starts to show up by the third quarter as companies such as ITT Educational, Education Management and Bridgepoint Educationbegin changing their business plans and reducing their expected growth rates.

2. Netflix

Netflix's stock gets rocked as the company's margins take a hit, the result of a price war over video streaming. Investors will go rediscover CEO Reed Hasting's comments during the company's third-quarter earnings call, when he said, "You tell me what happens with competition, and I'll tell you what happens to margins."

The stock will lose three-quarters of its value, as the market for streaming video becomes more competitive and commodity like, and Netflix will be acquired. After a lengthy bidding war, which drags in Appleand Amazon, the winner is: Google.

3. ETF Troubles

As ETFs continue to proliferate, this will be the year they come under scrutiny after the sudden price collapse of a highly leveraged ETF causes wide-ranging ramifications in the stock market. The ETF industry will react by saying this was an aberration as it allays fears that the critics may have been on to something.

4. Chinese IPOS

This market will cool after an unusually high number of emerging U.S.-traded Chinese companies get caught up in allegations of accounting fraud, causing their share price to tumble. US investors shy away from the group after realizing that many of these companies had no business going public in the first place. US stock exchanges, embarrassed by the news, enact new listing standards for all foreign stocks.

5. General Motors

The old adage: Buy on the rumor, sell on the news takes hold at General Motors. After an okay debut, the automaker's stock early in the year slips below its public offering price ($33.00) as the hype of the deal gives way to the realities of the business. Pension-related costs and tough competition make investors wish they had paid closer attention to the 15-plus pages of "risk factors" in the company's IPO prospectus.