2011 Forecast: Stocks, Housing, Oil Prices

Every year I interview the Chief Economist of a major Wall Street firm and ask for his best guess on the direction of stocks, oil and housing prices. I also ask the same questions of people like you.

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If you saw Monday’s post called Are You Smarter Than Wall Street Experts?, you know that we have an annual tradition here at Money Talks News that includes asking an expert where he thinks stocks, housing, and oil will go in the year ahead. We also stop random people on the street and ask them the same questions – then we check back a year later and see who was closer.

Monday’s post was about looking back to see whether Main Street or Wall Street was closer in 2010. (Spoiler alert: It wasn’t Wall Street.) This post is about getting predictions for 2011 on tape, so we can look back at them this time next January.

Check out the following video and see what a Harvard Ph.D. economist thinks might happen next year, as well as what random strangers on the street think. And while you’re watching, make your own guesses. I’ll make some as well on the other side.

A recap of guesses from both Wall Street and Main Street:

  • Stocks: David Wyss of Standard & Poors says up 10 percent. Our person on the street said down 8 percent.
  • Oil: Wall Street says about where we are now: $90 a barrel. Main Street says $100 a barrel.
  • Housing Prices: Wyss says housing prices will continue their decline into the spring but then turn around and head higher, with the net result for the year being flat. Our person on the said prices will drop a further 4 to 5 percent.

For what it’s worth (not much), here’s what I think:

Stocks: I agree with Wyss on the direction of stocks, but I’m a bit more optimistic. This will come as no surprise if you’ve been following my online portfolio. It’s in the same position as it has been since I assembled it: poised for an economic rebound. While the low-hanging fruit has already been plucked, I think there’s still some money to be made in stocks this year. My precise prediction? Up 12 percent. (For more on how I’ve invested my money, see my recent post, How I Beat the Pants off the Pros Last Year.)

Oil: I’m more inclined to side with Main Street on this one. In fact, I think oil will be $110 per barrel at the end of 2011. Again, this goes with my theme of ongoing economic recovery: See a recent post by fellow writer Michael Koretzky called Gas Prices Going Up Again – and This Time, They Might Not Come Down. And if you’re concerned, also check out my recent post 28 Ways to Save on Gas You Already Know – and Maybe One You Don’t.

Housing: I think 2011 will be the year that housing starts to recover. David Wyss says flat for the year, our man on the street says down – I’ll take the high road and call prices higher by 3 percent. And, as with investing in stocks, I’m planning to put my money where my mouth is. I’ve been looking at foreclosures lately, although I have yet to pull the trigger. For my logic behind higher housing prices, see a post I wrote last July called Why You Should Buy Stocks and Houses Now.

Now that I’ve told you what Wall Street, Main Street, and I think about the future for stocks, oil, and housing, I’ll add one more thing – it’s useless information. As I’ve said many times before, anyone who thinks they can foresee the unforeseeable is either a liar or a fool. The sheer number of variables that can potentially influence financial markets mean that accurate predictions, especially short-term ones, are really nothing more than luck.

To put it more succinctly: Even the blind squirrel finds the occasional acorn.

That being said, I hope you have some opinions of your own, and if they’re strong enough to be called convictions, I hope you’ll act on them. In the meantime, take a minute and join the conversation – tell us below what you think the year holds in store!

Stacy Johnson

It's not the usual blah, blah, blah

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  • Matt Matherne

    I think the market is being artificially stimulated to restore the confidence it once had. That is when people where investing in 401k, IRA’s etc. We believed in the system back then. Now the market doing damage control. Trying to restore that faith.
    If and when the confidence is restored again the same fox’s that were guarding the chicken coup will raid it again.
    Don’t forget that no real reform has taken place on Wall Street and the Banking community. The white color criminals are still there in the background. They are just keeping a lower profile for the time being until the time is ripe to raid the chicken coup again.
    More companies are opting out of matching the funds their employees put away in 401k’s, IRA’s etc. The American dream of buying a home to use as an investment vehicle is gone. Health-care is costing more with more companies passing that cost onto their employees. So the crooks on Wall Street are hoping that if they make it look like Wall Street has gotten their credibility back people will once again start reinvesting. They want you and I to look at Wall Street as really the only place left to invest your money.
    I for one don’t believe for a minute that Wall Street and the Bankers will ever get my trust because they know that White Collar crime pays. Wall Street and the Bankers buy the best politicians money can buy so they can bail them out when they make bad decisions. They know that our members of Congress the pass the cost of their screw up on the tax payers anyway. So what do they have to fear or loose?

  • Anonymous

    Oil price will be down to appox $76. by June. WHY?
    Its clear the middle east needs to sell oil fast to keep its people of the street, and rebuilt Libya and others. The west is moving away from OIL, new oil finds are coming on line.. Its mad . I’m off loading oil FAST.
    Patrick McPolin ADI

    PS: There are those who have bought in to oil, and are finding hard to get out. Thats why prices are high.

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