Parameters for 2010 via HFN

HFN Insider Observations

2010-Year of the Paper Tiger-The Sturdy 30
As this will be the "original" Shadow's last missive, I must leave you with one thought: linear thinking does not work, certainly not in our exponential world.

So as I keep hearing managers tell me that 2010 is "their year," I become somewhat concerned. Your year? What will savvy investors tell their $3 billion "investment committee safe" manager?

"You was my manager, Charley, you shoulda looked out for me a little bit. You shoulda taken care of me just a little bit so I wouldn't have to take them dives for the short-end money."

Below are your investment parameters for 2010. Careerists, please ignore.

1. Ten-year rates dip below 2% and Bill Gross gets his own MSNBC show and then runs for office.

2. The Dow slips under 8000 due to worldwide sovereign frailty and small bank runs . . . then rallies big in the fourth quarter to finish close to 11,000.

3. Not only will weak European countries have their debt downgraded, but so will the United Kingdom and France.

4 .The best performing strategies will be risk arb (finally back), distressed, emerging markets and yes, once again, MBS.

5. Investors will do well with long-short equity funds that will go net short mid year. Long biased funds average less than 10%.

6. A healthcare bill, albeit diluted, will pass by the second quarter.

7. The Obama Administration will declare victory in Afghanistan by July 4th.

8. Hard assets, including residential real estate in Florida, will appreciate significantly, despite the further collapse of commercial property in the northeast.

9. Gold will hit $2,000 an ounce after its collapse to $690 an ounce, as the Euro approaches par with the dollar once more, and Sterling drops to $1.19. The Ugly American is back. The pretentious French couple taking pictures in Grand Central Terminal are gone.

10. Chinese, Brazilian, and Indian stock markets edge higher and correlate with the United States less than ever before.

11. Tiger Woods' divorce is finalized mid-year, and he three-puts his first two greens in his comeback; which is not the Masters.

12. Smaller funds significantly outperform the big boys. Multibillion dollar funds morph into traditional mutual funds and continue to disappoint.

13. The New York Yankees finish in second place in the American League East.

14. The Cleveland Cavs finally win it all. LeBron stays with Cleveland.

15. March Madness puts Duke, Syracuse, Vanderbilt, and Kansas in the Final Four. Purdue and Kentucky have great runs.

16. There will be a record number of successful emerging managers.

17. Anti-big bank riots break out in Miami, L.A., Chicago, and Boston as lending stays tight and bonuses continue to breach the moral suasion paradigm.

18. Anti-Goldman Sachs demonstrations are held at Goldman Headquarters and Central Park. More than 250,000 attend.

19. The New Orleans Saints repeat as Super Bowl champs.

20. Hedge fund assets finish the year over $2.5 trillion.

21. Frontier markets grow more than any other market.

22. Dick Cheney is discovered in a transgender scandal.

23. Vice President Biden reveals silent battle against Tourette's syndrome.

24. Two right wing Republican congressman caught in male prostitute ring.

25. Two left wing Democrat congressman charged in extortion scandal.

26. Greece and Spain leave the European Union currency agreement.

27. Bank of America begins process of dismemberment.

28. JPMorgan begins process of dismemberment.

29. Citibank begins government imposed process of dismemberment.

30. Ken Lewis is found guilty. Sentence reduced to time spent in front of oversight committees.