I normally do this as my last Money Morning of the year, but in the words of Harold Macmillan, “events, my dear boy, events.”
So, in a break from tradition (and never advise going against the wisdom of your forefathers), my first Money Morning of 2023 is to revisit my predictions for 2022 and see how I got on. (I’ll post my predictions for 2023 next week).
This is more an exercise in entertainment than anything else because, in case you needed reminding, risk management changes - and so do forecasts - as events unfold.
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As Mr Keynes once said, “When the facts change, I change my mind. What do you do?”
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2022: a year of extremes
When you leap back a year, and there’s stuff that’s wildly out, and I have egg on my face, because, for example, a certain man ordered the invasion of a certain country and that threw things off rather, by all means, chortle at my expense - but don’t think I didn’t revise my opinions.
Right, that’s the excuses over and done with.
A reminder of the rules: I get two points for a direct hit, one point for a close call but not a bullseye, zero for a miss and minus one for a howler.
There were 14 predictions and the first was a humdinger of a howler.
My view was that, because of the scalability of tech, the Nasdaq would continue its relentless march higher and we would see 19,000. The opposite happened. Tech gave back all its post-Covid gains minus one.
Prediction two was that oil (Brent), which began the year in the region of $77, would revisit $100. We hit that target in March. Two points.
Prediction three was that the US dollar index would start weak, with support at 95, and later go higher. Longer term “the dollar looks like it can go a lot higher”. It did start around 95 and then it went a lot higher. Two points.
Prediction four was that gold, which began the year at $1,825, would go north of $2,000. It went to $2,080, then it went down. Two points.
Prediction five was for the S&P 500 to go to 5,000. Wrong. Bear market. Minus one.
Prediction six was for the crypto market cap to go above $3trn. The year started quite well, but no. Minus one.
Prediction seven was that two other nations would follow El Salvador’s lead and adopt bitcoin as legal tender. Just the one did - Central African Republic back in April. Zero points.
Prediction eight was that copper goes above $5/lb. It did. For one day in March. Technically, it’s a two-pointer but I’m only going to give myself one because it had such a horrible bear market later in the year.
Prediction nine was for house prices to continue their relentless march higher. Amazingly, house prices have marched higher.
“Average UK house prices increased by 12.6% over the year to October 2022,” says the ONS. That will come down as the data for the last part of the year comes in. I’ll give myself a point. The backdrop for house prices is looking shakier than it’s looked in a long time.
Prediction ten was that the pound would get to €1.24. It didn’t. €1.21 was the high, ending the year lower than when it started. Zero points.
Prediction eleven was that silver would disappoint, as always, and can’t get above $30. You can always depend on silver. It disappointed. As always. $2, or just nigh, was the high. Two points.
And so to Prediction twelve which was that, to everyone’s surprise, Boris would still be Prime Minister. Ha! We’ve had two since then. Uh-uh.
Prediction thirteen, your Bruce-y bonus sports prediction, was that Manchester City would win the league and that Watford, Norwich and Burnley all go down. A bulls-eye, sir. This year’s table will be much harder to get right.
And, finally, my prediction fourteen, “based on my own instincts, not data or science” was that “Peak Covid has now passed and something akin to free movement can slowly return”.
It looks obvious now. It was not then. I lost Christmas last year to it.
The bottom line
And so to the score. The maximum possible would be 28. Minimum minus eight. Both so extremely unlikely as to be impossible. I’ve got a middle-of-the-road, deeply mediocre 11.
Could do better, as my school teachers so often noted.
Happy new year, everyone, hope you have a great 2023 and that prosperity makes a welcome return to our portfolios.
