Today, I get out my red pen and start marking.
For some reason, this is perhaps the article I most look forward to writing.
The year we saw the backlash against the backlash
Change is incremental. It’s not something that happens overnight, or with one seismic event (usually), but gradually over time. When you look back three years, or ten, it really becomes apparent how much the world has changed. It’s even apparent over a year.
Reading through last year’s effort, I’d say there’s a lot more bullishness in the air than there was a year ago. It’s feeling very bubbly.
I had two big themes for 2017. The first was that the current of dissatisfaction with the political class, which brought us Brexit and Trump, would continue. However, given that (Germany aside) there were no votes scheduled of the magnitude of Brexit and the US elections, it would be more attritional.
The “establishment” would fight back against the “anti-establishment”. “It will try to disrupt Brexit with legal processes, bureaucracy and noise. Trump will meet with similar opposition with every step he takes”. That’s pretty much what we got.
The second, equally enormous current, was “the disruption of existing practices because of new technology” to continue. Looks pretty obvious now. It was then to be honest.
On to specifics. The scoring system is simple. I get two points for a hit, one for a near miss, zero for a miss, and minus one for an “epic fail”.
What I predicted: a contrarian rally. “Gold is loathed, bonds are loathed, stocks are loved. So in Q1 gold will stage a rally, bonds will stage a rally and stocks will sell off.”
What we got: gold rallied hard in January and February. From $1,150 an ounce to $1,250. It sold off in March then rallied to flirt with $1,300 by early-April. Stocks, as measured by the S&P 500, were flat in January, then rallied in February and pulled back in March. Bonds (as measured by the ETF TLT) range-traded – they rallied, sold off, then rallied to end the quarter up slightly.
Score: I’ll give myself one point. I was sort of right, but it was not as cut and dry as I’d have liked.
What I predicted: new highs for bitcoin. “It’s a bull market… in 2017 bitcoin breaks out to all-time highs. The value of a bitcoin exceeds the value of an ounce of gold’.
And some! Bitcoin smashed past gold in the spring. It’s amazing to think that in May you could still buy a bitcoin for $1,350. It touched $20,000 over the weekend.
Score: 2 points.
3. FTSE 100
What I predicted: “We will see the FTSE 100 hit 8,000 in 2017.”
The FTSE began the year at around 7,100. The high for the year was 7,600. While markets elsewhere have rallied, the FTSE, largely due to the strengthening pound, has been flat.
Score: Nul points.
4. Dow Jones
What I predicted: “In 2017 the Dow will not fall below 17,000.The high will be over 22,000”.
And some! The low was about 19,750. The high was yesterday, closing in on 25,000.
Score: Two points.
What I predicted: “In 2017 we will see $30 uranium: the price rises more than 50%.”
Uranium began the year at $20. The high was around $27. Current price is $25.
A 35% rally is good, but it’s not a 50% rally. $27 is not $30.
Score: Zero points.
What I predicted: “Despite the best efforts of those who would oppose it, Article 50 is triggered somehow. Nobody really knows what they’re doing, but we muddle through.”
I think that sums it up.
Score: Two points.
7. The pound vs the dollar
What I predicted: “The pound vs US dollar. The current price is $1.22. In 2017, it goes above $1.30, but it also flirts with $1.05”.
I added that comment about it flirting with $1.05 at the very last minute and I hate myself for it. There was so much pound bearishness this time last year, and I pandered to it, even though I was bullish. Gah!
Score: The pound never went anywhere near $1.05. The low for the year was $1.20. Epic fail. Minus one point. But $1.30 was broken (the high for the year was actually $1.36), so I’ll award myself a point for that, giving me a grand total of zero points.
What I predicted: on gold, “$1,050 an ounce or thereabouts is the low; the high is close to $1,300”.
The low for the year was actually $1,150, the high was $1,360.
Score: tempted to give myself a point, for some reason, but why? I was wrong. Zero points. If I were being really harsh, I’d give myself an epic fail.
What I predicted: trade wars. Whether between the EU and the UK, or Trump and China, “I can see the theme of trade wars making an unwelcome return in 2017. I’m not predicting a full-on trade war – it would take a lot to get there – maybe ‘trade tantrums’ is a better description.”
Score: Bit of a limp prediction, really, though a correct one. Two points.
10. Interest rates
What I predicted: “Any rise in UK interest rates will be tiny. The pace in any rises will be glacial.”
Score: Despite inflation being north of 3%, all we got all year was a measly 0.25% rise in the autumn. Two points.
11. House prices
What I predicted: on UK house prices, “top-end London property continues to stagnate and slide, while mid-range stuff holds up better, so that overall London is only slightly down on the year – say 3%. The rest of the UK rises by a few per cent.”
That is sort of what happened, though according to the ONS London is actually up 2%. Rightmove’s numbers, which are based on asking prices, has inner London down 3.9% and outer London up 0.4%. The rest of the country is up a bit.
Score: Two points. Just.
12. The oil price
What I predicted: on crude oil, “Brent crude oil goes to $67 a barrel, and maybe higher. It doesn’t go below $45”.
Score: Ach. Oil is a cruel mistress. Brent touched $66 last week, the year low was $44.5. Within a whisker of getting both right, but whiskers do not mean points. Zero is the score.
13. Bonus sport prediction
What I predicted: finally, the bonus sport prediction. “Chelsea win the league. Swansea, Hull and Sunderland go down”.
Chelsea was obvious, almost as obvious as Manchester City now. It was actually Middlesbrough, Hull and Sunderland who went down – so I got two of the three.
Score: One point.
Totting it all up I think that’s 14 from a possible 26. A respectable score, but nothing to brag about over the turkey (actually we are having capon). Mid-table mediocrity I think they call it.
I’ll be back with my predictions for 2018 in my first Money Morning of the New Year. In the meantime, Happy Christmas everyone! Don’t eat too much, and make sure you get plenty of exercise.