Predictions 2015

Market will have a 'meh' year: Sullivan

A dull but important reminder: These are just for fun! Neither I nor my family invest in any of these predictions—or anything at all outside of our 401(k) plans and the offerings they include.

We at CNBC cannot own individual equities (save for shares of Comcast through our employee ownership program). I also don't buy or sell any options, commodities or short anything (though I wish I could have acted upon my negative feelings on gold the past few years).

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With that out of the way, here are my predictions for 2015. If I'm right, you'll hear about it. If I'm wrong, I'm sure I'll hear about it from you. I wouldn't have it any other way.

The Dow has another ‘Meh’ year, up 0-5 percent


This echoes my macro market prediction for 2014 -- a prediction I am likely to get wrong, by the way, as the Dow is up about 8.5 percent this year as of this writing.

The prediction is similar because rationale remains similar: Most of the gains off the 2008/2009 collapse have already been made; the Fed is mostly getting out of the markets; earnings are good but most smart investors buy ahead of the real recovery not during it; valuations may not be rich but they aren't cheap either, and ultimately some individual stocks or smaller caps are likely to steal cash from the biggest companies.

As someone in a 401(k) plan, this is a prediction I would be happy to get wrong to the downside.

The 10-year yield ends 2015 above 3 percent

The Fed will raise interest rates next year. At least, this is what I believe, and rate hikes often (though not always) hurt bond prices and boost bond yields.

Sure, history is weak guide in these times of unprecedented central bank intervention. And yes, I know I will probably be on the other side on this as many of the strategists and investors I most respect. But hey, disagreements can make the best interviews.

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Bottom line: treasury yields move up next year, perhaps markedly. (And if I'm right, you've seen the lows – perhaps for our lifetime – in 30-year mortgage rates.)

Gold ends 2015 below $1,000/ounce

Getty Images

I've been concerned about gold for four years now. Though I was a little early, gold is down about 30 percent since I continued that prediction of a fall of 15 percent or more back in December 2011. Gold's drop was also a prediction of mine this year and I see nothing to change my views. Gold ends 2015 with only 3 digits ahead of the decimal.

A big sovereign default

Russia? Venezuela? Both? The fast and steep drop in the price of oil will hurt some economies hard. The cost of insuring Venezuelan debt is already spiking and the Russian Ruble is sinking, indicating the market sees risk. Whatever happens, remember that when countries default, their stocks counterintuitively often rise! Something to watch.

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IBM splits up

Ginni Rometty speaks
Ginni Rometty speaks

Though IBM is shedding some assets, I think a more dramatic strategy shift is likely for a company struggling to sell its corporate identity to investors. Revenue is down from a few years ago as IBM's marketing shift to 'the cloud' doesn't seem to be working. IBM stock has also completely missed the bull market run of the last few years, trading at the same price as late 2011.

If this type of underperformance continues, IBM shareholders will only grow more aggressive. Though in an October interview with my colleague, David Faber, CEO Ginni Rometty, discounted the idea of a split up of the company, she would certainly not be the first CEO to change strategy. (Note: if this does happen, IBM could be at risk of being booted from the Dow Jones Industrial Average ... potentially opening the door for that other little computer company, Apple.)

Looking back

Here are my predictions for the years …

All in all, not too bad a record! (Which means this year I'll probably go 0-5!)