Below is the full 2011 Bespoke Roundtable Q&A with Michael Panzner of Financial Armageddon.


1) Looking back on 2010, what were your best and worst calls?


I had so many bad calls that it’s hard to choose, but being bearish on U.S. stocks was probably the worst, followed by being negative on gold (in the short run, at least).

My best calls: being negative on Chinese stocks and U.S. home prices.


2) What surprised you the most and least about financial markets in 2010?


Actually, both answers are the same as last year:

Least: The fact that equity investors don't really have a solid grasp of macroeconomics or geopolitics.

Most: The willingness of policymakers and investors to repeat the same mistakes that helped bring about the worst financial crisis this century.


3) What is the one thing that you think has contributed the most to the market rally we’ve seen off the March 2009 lows?


Reckless policymaking.


4) What will be the biggest surprise of 2011?


It’s a toss-up between a full-scale cross-border conflict in Asia or the Middle East, initial steps towards dissolution of the European Monetary Union, or a legislated timetable for the abolishment of the Fed.


5) How long will the current bull market continue?


Only a matter of days.


6) What are the various indicators that you follow closely telling you right now about where the stock market is headed in the near term (next couple of months)?


I think a recent headline from Zero Hedge summed things up best:
“Charting A Ridiculously Extreme Market, In Which The Dumb Money Is The Most Confident It Has Been In 5 Years.”


7) Many of you noted that cloud computing would be a popular area of the market in 2010, which turned out to be correct.  What areas of the market or themes will gain more popularity in 2011?


Security services, weapons manufacturing, and specialty pharmaceuticals (especially those firms that produce anti-depressants and painkillers).


8) What do you believe is the contrarian call on equities right now?  The economy?  Is investor sentiment currently misplaced?


Bearish; bearish; yes (and that’s an understatement).


9) There has been a lot of commentary about the US entering into a “lost decade” similar to Japan in the 90s.  What is your take on this?


Thanks to the efforts of individuals like Alan Greenspan and Ben Bernanke, our future will look nothing like Japan’s “lost decade”; the more fitting example is probably Weimar Germany.


10) In what ways have you had to change your investment strategies over the past couple of years? 


I try not to think too much.


11) What sectors do you believe will perform the best and worst in 2011?


Best: traditional defensives

Worst: materials, industrials, and technology


12) Financials have been lagging the market for much of 2010.  Do you expect this to continue into 2011?  Can the market rally without the Financials?


Financials have already begun to outperform the broader market, aided by bargain-hunting and the fantasy that things can’t get any worse for real estate, the economy, and the industry’s political fortunes.  Reality will likely set in by the end of the first quarter.

Otherwise, my view is that the market won’t rally, regardless of what the financials do.


13) What’s in store for the US economy in 2011?


I see red all over.


14) The consensus seems to think that the employment picture will get better in 2011, albeit slowly.  Do you agree or disagree with this call?




15) What are the biggest problems that could emerge in the coming year that could derail the recovery, and how likely are they to occur? 


I don’t believe there has been any “recovery,” as such.  Some parts of the economy have clearly benefitted from an unprecedented orgy of easy money and public sector profligacy, but changing economic and political realities will likely put an abrupt end to all that as January rolls around.


16) Are Ben Bernanke and the Fed helping or hurting the recovery?


Let me say this: I wonder how Ben Bernanke feels about being the last Chairman of the Federal Reserve?


17) When will the Fed begin to raise rates, and will this be too early, late, or just about right?  (We asked this question last year as well, and rates have yet to change!)


The Fed will be wrong-footed, as usual, but it won’t really matter.  The fallout from decades of bad policies will be the primary determinant of future interest rate moves.



18) After a bounce off the lows, home prices and sales have begun to dip again.  What is the reason for this and what’s in store for real estate in 2011?


The residential real estate market is under pressure because there is (still) far more supply than demand; throw in the fact that interest rates are heading higher and economic conditions are deteriorating, and things can only get worse.


19) Will the Dollar (US Dollar Index) be up or down in 2011 and why?  Is there a serious threat to the Dollar as the world’s reserve currency?


Up strongly in the first half, then easier into the second half.

Yes, but probably not during the next 12 months.


20) What are your current thoughts on gold – bubble, just the beginning, or fairly valued?


Still very bubbly and vulnerable to a major shake-out, but my longer-term outlook remains bullish.


21) Oil doesn’t get nearly the attention it got back in 2006-2008, and it seems to be losing steam as an asset class that investors want to be in even though it has slightly outperformed stocks in 2010.  What is your take on oil as an asset class in 2011?


Likely to weaken along with other commodities, unless and until war begins in the Middle East.


22) Which alternative energy sources do you expect to gain the most market share over the next decade, and what are some of the best ways to invest in these areas?


Nuclear; uranium producers.


23) What is your take on the automobile sector in both the US and abroad?  Will the new GM stock be up or down in 2011?  What is your favorite auto play?


The sector is an accident-waiting-to-happen, both here and abroad.  Rising interest rates, diminishing buyer incentives, growing economic malaise, and the sector’s popularity among highly-leveraged, trend-chasing speculators are just some of the reasons why this group will be the one to avoid next year.


24) How will the new Congress impact the stock market and the economy in 2011?


Their efforts will dovetail nicely with the ugliness I see unfolding all around us.


25) What is your take on the political environment in the country right now and what changes, if any, need to occur to make it better?  Will politics play a larger or smaller role in the year ahead?


Americans are growing angrier by the day and politicians can’t help but feed off sentiment like that. The end result will be cacophony and chaos in Washington, which will only serve to exacerbate all our other problems.


26) Is the country finally serious about the deficit problem and ready to take steps to reduce it, or are we just seeing more posturing?


People are more serious, but it’s too late to change course.  America is well on the way to another round of financial Armageddon.


27) What are the biggest global threats to the stock market right now, and how much of a threat are they?


See question 4 above.


28) Which countries/regions are you the most bullish or bearish on at the moment?


Bullish: none

Bearish: spoiled for choice


29) China’s stock market has underperformed most of the world in 2010.  Will we see outperformance or underperformance from China in 2011?  How do you expect other emerging markets to perform in 2011?


Underperformance; badly; Greece


30) Will the following be up or down (positive or negative) in 2011?  Where noted, what are your 2011 year-end price targets?  The price targets are meant to obtain a “wisdom of crowds” consensus number from all Roundtable participants.


-S&P 500 (up or down and year-end price target) down, 875

-Long-Term US Treasuries (up or down) price down/yield up, 6.00%

-Corporate Bonds (up or down) price down/yield up

-Junk Bonds (up or down) price down/yield up

-Gold (up or down and year-end price target) down, $975

-Oil (up or down and year-end price target) down, $60

-Dollar (up or down) up

-Average US Home Prices (up or down) down

-China’s stock market (up or down) down


31) Please provide readers with any stocks that you really like right now and for 2011 and beyond (and why).




32) As one of the most popular financial content providers out there, what advice would you give someone looking to get into this arena, and how has the industry changed since you started doing what you do?  Where do you see our industry going with the ever-changing way that individuals and investors get their information?


Be passionate, thoughtful, consistent, and entertaining.  Pretty simple, really.  


33) What are the websites, magazines, newspapers, books, apps that you use the most and would recommend others to use?


My blog roll has over 300 interesting and useful hand-picked sites.  That’s probably as good a place to start as any if you want to know what is really going on in the economy and with the financial markets nowadays.


34) Do you have any other advice that you would like to share with readers heading into next year?


Watch out below.