HFN reports on "The Shadows" forecast performance ala "The Sturdy 30"

The Sturdy 30 Redux
After an astonishing year in the financial markets and the world in
general, it seemed like an excellent time to review one of the premiere
features of this column, "The Sturdy 30."


HedgeFund.net managed to track down the elusive Shadow to get
his reaction to how well he did in his 2009 prognostications. The
Shadow's predictions are reprinted below for our readers' edification
(and delight when he got it wrong and you got it right.)


So now, for a look back into 2009 and a peek forward into 2010, we bring you: The Shadow.


1. The Dow Jones will finish 2009 above 10,000 after dropping to 7200. The Shadow: Given everyone's negativity -- an amazing prediction. HFN: So does that make you a contrarian? TS: Somewhat.


2. The 10-year note will drop below 2% and finish close to 5%. TS:
A little wide on the ranges. I thought volatility was going to be more
extreme, but it wasn't although the yield curve was at its steepest in
history. I'll give this one a mediocre.


3. GDP growth will be -5% for the year, despite a slightly positive Q4. TS: Too extreme, although I was right on the Q4.


4. Inflation will become a real issue by Q4; not just monetarist propaganda. HFN: Wrong. TS:
Yes, wrong. And it was monetarist propaganda. No matter how much you
have in balances if you don't lend and there's no velocity, you're not
going to have inflation. HFN: So is this a conspiracy against The Shadow? TS: Yes, it's a conspiracy specifically against The Shadow by people like Paulson, Bernnake, and the rest of the lemmings.


5. Oil will drop to $29 a barrel and finish the year at $80 a barrel. TS:
It got down to $33 or something. This is good. This was a major
money-making prediction for anyone who wanted to listen to The Shadow.


6. Ken Lewis will resign by June 1. TS: Wrong, but four months later, he resigned. HFN: I don't think we can give that to you. TS: All right.


7. The markets will embrace the Geithner program as the details are revealed. He will be vindicated. TS: No doubt that was correct because it seemed to stabilize the economy. How could they not embrace it; it was a handout.


8. There will be a violent 700-point up move on the Dow before Easter. TS: Way off; that was really bad. Although the market did go up 4,000 points.


9. Obama will make two Supreme Court appointments this year. They will be more conservative than many Democrats had hoped for. TS: Just plain wrong.


10. NYC will near bankruptcy and need a bailout despite Bloomberg's good work. TS:
Not yet! I think I'm early on this, but not only New York, but other
municipalities, and maybe even industrialized countries like the U.K.
could have a problem in the next year.


11. Risk management and strategy allocation will no longer be just buzzwords. HFN: This is barely a prediction but we have to give it to you. TS: My apologies.


12. Hedge funds will have a positive year; the average HFN aggregate index will be about +10% by late summer. TS:
This is not bad. We are up 18.06% [according to the HFN Hedge Fund
Aggregate Index.] In August it was up about 11 or 12%. This is right
on.


13. Low volatility funds will be first on investors' A-list when investing begins again. TS:
Again, that's correct. Not only low volatility, but transparent and
liquid. Not a big deal, but nonetheless it took them a while to get it.



14. The House will try to retrieve Merrill bonuses, partially succeeding. TS: They just made a lot of noise; they didn't do anything. Obama's bark is much worse than his bite.


15. Japan will be the best performing equity market. TS: Brazil was.


16. The emerging markets will be first out of the recession. TS: Correct.


17. Mandarin will pass Spanish as the fastest growing second language in the U.S. TS: Again, I'm early on that one, but it is going to happen.


18. Louisville will win the NCAA basketball tournament. Duke will not make the Sweet 16. TS: Ouch. [Note from HFN: A reader commented on this one: "Louisville? You've called the other 29 into doubt with that pick."]


19. The Mets will win the pennant. TS: I hate the Mets.


20. The Jets will have a losing season. TS: 500 as of now; they will have a losing season.


21. DIP funds will become the new strategy du jour. TS: Wrong.


22. Gazprom will make a major Western acquisition (in Europe). TS: Natural gas is the future. [Note from HFN: But still wrong.]


23. China, despite its slowdown, will be the second best performer. TS: Right.


24. The U.K.'s real estate collapse and deep recession will put its sovereign rating on the watch list. TS:
Yes; absolutely correct. People were shocked -- how could one of the
largest economies in the world have a sovereign rating threat. And it
did and still does.


25. Hedge fund assets will end the year above $2 trillion. TS: Oh man -- that was just prescient.


26. Bernie Madoff's attempt at a plea bargain will not be successful. TS: I think that's correct.


27. The Obama administration will make education its focus after the stimulus program slowly takes effect. HFN: Too much of a hedge. TS: I'll be more forthright next time.


28. Long-short equity will be a mediocre performer; healthcare, though, will shine. TS: Long-short did okay, but healthcare did great.


29. The number of funds-of-funds will be halved. TS: We lost about 30% at least; I don't know about half.


30. The Shadow's reader base will increase exponentially. TS: Of course.


The Shadow, never one for false modesty, has a final word for all those who have followed his crystal-ball gazing career:

"Given the number of predictions I got correct, people should pay huge
amounts of money to be able to read The Shadow Sturdy 30."