Looking back on 2015, there’s not much anyone could have predicted, but it certainly paved the way for a decent look ahead.
Keep an eye on these growing trends to follow––and avoid––in the new year.
Ah, 2015. Radio Shack went bankrupt? Volkswagen (VLKAY) engineers programmed their cars to cheat federal tests? Budweiser (BUD) and Miller merged? Miss Columbia didn’t win Miss Universe?
Looking toward 2016, the craziness will continue––but some things are already fairly clear.
Here are five ways investors can look forward to the year and profit from it—or at least not lose—in 2016…
Social Media Collapse (Except Facebook (FB))
We all use social media accounts to keep in touch, but mostly to rant and just waste time.
For many invested in social media, that’s exactly how they feel today. In 2016, many expect the downward trend to keep going for the most part.
When Twitter (TWTR) had its IPO, everyone bought. It seemed like the perfect investment. Everybody from Kanye to your dog groomer was tweeting, and it grew. CNN used tweets to broadcast news, and, more important, to get news.
After seeing a spike in 2014 at $69, the stock fell as the company struggled to land a new CEO and saw massive layoffs.
Today, it trades near $22.
LinkedIn (LNKD) is also struggling. Let’s take a look…
The Peril of LinkedIn
While Facebook, Twitter and others are based on an advertising model, LinkedIn (LNKD) uses a mostly-subscription model that isn’t taking off. The company has grown in terms of reach and experience, but not investment.
The company’s stock has been on a pendulum swing that a series of new products for 2016 (LinkedIn Referrals, LinkedIn Recruiter, and a new mobile app) might not be able to solve.
Regardless, the site did see its user base grow with 49.5 million new users in the first nine months of 2015.
Sure, LinkedIn’s growth of 49.5 million new users sounds good, but Facebook (FB) has more than 150 million active users. Every one of them, it seems, is snapping up FB shares, as the price has been on a steady climb since late 2012.
Three years of solid growth is definitely nice, but the company has several new products ready to launch in 2016 that will only grow its base in 2016.
Next up: a heavy hitter that’s going nowhere but down…
Walmart (WMT) Will Keep Sinking
There seems to be no end in sight to the world’s largest retailer’s stock collapse.
In early 2015, Wal-Mart (WMT) said it would pay its associates more—all 500,000 of them. It was a good PR move as many cities considered “living wage” amendments, but it didn’t help the stock.
For most of 2015, the stock seemed to be in free fall. In August, however, WMT missed its earnings projection, ironically unlike Target (TGT) which boasted a beat.
Walmart, then, cut its expectations further going into the holiday season, saying they were adding hours to staff and increasing overhead.
Regardless, October’s annual meeting couldn’t have been comfortable for company executives when they broke the bad news to shareholders that the next two years will be painful.
According to USA Today, Wal-Mart Executive Vice-President, Charles Holley, said, “As a result of these investments, we expect earnings per share to decline between 6% and 12% in fiscal year 2017, however by fiscal year 2019 we would expect earnings per share to increase by approximately 5% to 10% compared to the prior year.”
Ouch.
The Sharing Economy Will Grow
It’s time to get in on the sharing economy and share some wealth. While we can’t buy any stock in Uber, Lyft or Airbnb yet, there are a few companies out there that we can.
HomeAway (AWAY) is a lot like Airbnb, but it caters to higher-end real estate and vacations. The company says it has more than 1 million listings in 190 countries for everything from penthouses to beach houses. The stock hasn’t really seen any giant moves, nor has it posted any huge earnings, but it could be on the cutting edge for investors interested in the new sharing market.
In the sharing world, though many of the companies we know are still startups, several expect IPOs from both Uber, the taxi-like service, and Airbnb, the service that lets anyone rent out their home, casita, extra room or chicken coop for a day (or a month).
If things go as Uber has planned, it could be worth $70 billion next year. That could set the stage for one of the biggest IPOs of 2016, if not ever.
Airbnb, too, could make a splash on Wall Street with an IPO. The company has plans to become profitable by 2020, and could be worth as much as $24 billion.
And, don’t forget that someone has to do the payment processing for these guys. Look to Paypal (PYPL) to become the go-to processor for these companies that rely on everyday people to make their purchases.
Oil Prices Will _____?
Who knows.
Predicting the fickle oil markets is always a career killer. But, for most of the last decade, oil has driven economies in the American West, and made fortunes for many as prices neared $100 a barrel.
Now, with oil less than $50 a barrel and world politics playing a major part what happens to its price, 2016 will be… interesting.
Luckily, there are some people who do predict these things for a living: the U.S. Energy Information Administration (EIA).
The EIA says prices should trend up, but just a bit.
What that means for oil stocks is small, if any, gains, and no big winners. Instead, look for oil companies like Exxon Mobile (XOM) and Royal Dutch Shell (RDS.A) to continue their downward slides for a while. In 2016, we may see oil bottom out at near $40 a barrel, and some say that may be a good time to buy.
Overall, the EIA expects oil prices (and yes, there are many types of oil on the market) to average $56 per barrel, up from $53 this year.
Also, Iran. The international community is lifting sanctions on the country, and some expect Iran to add up to 500,000 barrels of oil a day to the already flooded global market. Huge supply should mean lower prices.
The Big Crash of 2016
Anyone who follows the market has heard the dire warnings: The markets will crash. The bubble will burst. Something bad will happen.
When looking at 2016 trends in the markets, it’s clear that the fear mongering will persist.
If you haven’t seen the headlines, there’s: “Donald Trump Could Create a 2016 Stock Market CRASH, Experts Warn.”
There’s also this gem: “Author Robert Kiyosaki: ‘Biggest’ Market Crash Likely in 2016.”
And the site Greedometer.com has this analysis: “Market Crash 2016.”
And finally, this beautiful analysis from Forbes: “Market Pundits Predicting ‘Crisis’ And ‘Crash’ Deserve Our Mocking Laughter.”
Regardless, many of the sites that espouse a 2016 crash are the same ones that Snopes.com loves to debunk for their crazy conspiracy theories. Like the one that Willie Nelson died––he did not.
Most experts agree that there will not be a big crash in 2016.
Of course, China’s economy could collapse. Oil prices could drop to $20 a barrel. Sunspots could eat our atmosphere. An asteroid could hit the planet.
And Mark Zuckerberg could actually give away $4.5 million just for sharing his post.
This post originally appeared in mainstreetinvestor.com.
