3 Big Predictions for Next Year
Get ready, Fools! I'm putting myself out on a limb and offering up three bold predictions for next year that -- you'll see by the end -- are guaranteed to come to fruition. Read on, and you'll be armed with my expectations about what 2012 holds.
Prediction No. 1: The ascendance of natural gas
While we could argue endlessly about when it'll actually happen, it's a simple fact that the black gold coming out of the earth will -- eventually -- run out at the current rate of use. And even if that day is in the distant future, demand (and prices) for oil will likely continue to grow as the Asian middle class continues to swell.
When you think about it, oil is the single most important variable that's been driving economic production since the Industrial Revolution began well more than 100 years ago.
But instead of going out and buying up all the canned goods you can find, take solace in the fact that natural gas could quickly become the front-runner as the driver for future growth. And it's looking increasingly likely that natural gas has the potential to wean us from the perils of foreign oil as well.
Take a look at the abundant reserves we have right here in North America, and you'll see what I mean.
Source: Energy Information Association.
Of course, such abundance wouldn't mean a thing if natural gas weren't cheap. Luckily, it looks to be far cheaper than traditional petroleum-based derivatives. Take a look at the EIA's estimate of what a gallon of diesel or gas looks to cost travelers in the future, as compared to an equivalent amount of natural gas.
Source: U.S. Energy Information Administration, Annual Energy Outlook 2011. Natural gas assumes 7.9 gallons per 1,000 cubic feet.
But it could also be a boon to periphery companies. Westport Innovations (NAS: WPRT) , for instance, doesn't drill or capture natural gas, but it does design engines that allow cars, trucks, and trains to run on nothing but natural gas. Meanwhile, Clean Energy Fuels (NAS: CLNE) can supply the natural gas stations for these machines to fill up.
Any one of these companies is worthy of close inspection heading into 2012, and I highly suggest adding them all to your watchlist.
Prediction No. 2: Europe will not implode
While there's no doubt that Europe is in trouble, I doubt that we'll see it plunge back into the Dark Ages. I'm not saying there won't be bumps along the way, or that the eurozone will stay intact.
But by crook or by hook, the world's stronger economies simply have too much to lose by allowing Europe to plunge into depression. The Motley Fool's own Michael Olsen summed it up well when he recently said:
I think the eurozone has little choice but to pursue closer integration and fire up the printers (and as corollary, adopt so-called "eurobonds"), because that's the least of the evils -- and with its feet on the edge of the cliff, I think it will. For one, the collective debt burden of the eurozone isn't so bad. More importantly, I'd wager that any other option risks economic suicide.
For companies that have a lot invested in European sovereign debt, like Aflac (NYS: AFL) , or that derive a large portion of their revenue from the continent -- like McDonald's (NYS: MCD) or Procter & Gamble (NYS: PG) -- that would be a welcome development.
Prediction No. 3: Either the first, second, or both of my predictions will be wrong
While it's fun to make predictions, especially at year's end, the fact of the matter is simple: No one knows what the future holds.
Sure, we can make educated guesses. In fact, that's pretty much what investing is: making educated guesses about the future. Usually, the longer the timeline, the more likely you are to be correct, so making a prediction for just one year is actually a little silly.
What's far more important than actual predictions is your approach to those predictions. As fellow Fool Morgan Housel put it:
The world is fundamentally unpredictable. Things happen that no one could have seen coming. If you can't accept that when things change your opinions might need to change, too, you will be left anchored to a reality that no longer exists -- and likely making terrible predictions.
So though I'm going to offer you, dear Fool, a link to a special report highlighting our top stock for 2012, remember that the most important thing is to keep an open mind, stay on top of the latest news, and invest your money in places that will allow you to rest easy in an uncertain world.
At the time this article was published Fool contributor Brian Stoffel owns shares of Aflac and Westport Innovations. You can follow him on Twitter at @TMFStoffel. The Motley Fool owns shares of Aflac. Motley Fool newsletter services have recommended buying shares of Chesapeake Energy, Westport Innovations, Aflac, Procter & Gamble, and McDonald's. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.