What Will Be the Biggest Stock Market Surprise of 2007?

Everyone (in financial circles) keeps asking each other (and me) the same question: What will be the big surprise of 2007? What will stop the bull market from a fifth year of gains?

It won’t be interest rates, which are still low in historical terms. And corporate earnings are solid, even if slowing somewhat. Yes, the consumer looks tapped out, but consumers have looked tapped out since, oh …. 1958 or so. And strike avian influenza, a collapsing hedge fund, etc., as all are about as discounted by the market as they can meaningfully be.

So, if you had to guess, what outlier event — what black swan, to borrow my friend Nicholas Taleb’s apt construction — is out there and underestimated? Sure, maybe it won’t happen, but what downbeat probability is the market currently underestimating? A terrorist attack? Reversal of the gulf current? A new U.S.-led war in Iran? Wal-mart buying Amazon (okay, that one was for me)? 

You tell me.


  1. Mark Kraft says:

    My prediction would be that SixApart rushes to go public in late Spring of 2007 in order to beat reality finally setting into the blogging market, but that the IPO won’t go over all that well.
    Gartner is right about blogs hitting their peak, as new users aren’t coming on board fast enough to make up for those leaving the existing blogging services, or simply not using blogging services as often, and growth rates for new blogging services are lackluster, with most new accounts being statistically less active than accounts on prior services.
    This is, in part, due to the fact that people already are connected to too many social websites. They dip their feet more often than before, but actually jump in less often and less actively.
    Also, MMORPGs are quickly becoming the largest social websites for younger users, and sites like MySpace continue to eat the lunch of blogging sites. Such sites are enough for most younger users, who simply do not need — or often want — the burden of blogs. Too many potential hassles with parents and peers, so an increasing number of young bloggers are resorting to private “friends only” blogs. This closed, selective readership tends to drag down page views and site growth for blogging websites.
    Blogs in general are overhyped, and lack the dynamic growth or profit potential predicted in the past. In fact, there is evidence to support that sites like LiveJournal are dramatically shrinking, as far as active users per month.
    Google too, is probably shrinking already as far as users posting per month goes, but this won’t effect Google at all, primarily due to their size, but also because they can more effectively and profitably serve highend, keyword-driven ads on their services.
    I also expect that WordPress will be lean and competitive, and will expand their reach on the highend business market for weblogs. The competition will tend to drive potential profits lower for SixApart, which will have a hard time finding substantial profit margins to capitalize on, considering their extensive, overly optimistic expansion plans.
    They’ll site increased revenue, I suspect, but they’ll also have increased losses and will fail to break even for years, short of a major culling of their staff. For this reason, expect IPO revenue to be invested outside the blogging realm, in ways that are profitable already.

  2. Mark Kraft says:

    I should clarify. Google is growing… but Blogger (a Google property) is probably shrinking already, as far as active users posting per month. Most older blogging services are, simply because new, younger users have moved their social life elsewhere — primarily into MMORPG games and into sites like MySpace.
    There is also substantial user growth for college-oriented online community websites, which allow for fairly ubiquitous communication between people in that peer group, without opening up their lives to public inspection. Basically, it’s a kind of anonymity by peer group, and it helps to reduce the growth rates of other new online community websites, weblogs, etc.

  3. Vanessa tells me that Amazon is one of the most underrated technology companies. While I can’t say forsure that something big will happen in 2007 necessarily, as she put it to me:
    “I predict that some day everyone will be scratching their heads wondering why they didn’t see that it was Amazon that was the strategic technology leader all along…”
    Here’s a link to an interview with their CTO Werner Vogels….

  4. One major event could be the US govt. finally realizing and making public it’s concerns about global warming. Not only what it will do for oil and energy stocks in general but also how it will affect foreign policy issues – giving a kick to china’s pollution mess (and more importantly, the EU telling american “we told you to fix up your environmental policy earlier”)

  5. magnetic pole reversal

  6. There will be an astonishing development involving the world’s largest company and the world’s most populous nation.