It’s my final Money Morning of the year and it’s the one in which – now something of a minor tradition – I look back to my first Money Morning of the year and mark my predictions.
Predictions are fickle little monsters. The ones you get right look obvious after the event, and the ones you get wrong make you look stupid. “How on earth could he have thought that?”
But, probably thanks to my second life as a comedian, I can shoulder looking a bit silly every now and then, so it’s all water off a duck’s back.
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So here we go.
The scores on the doors aren’t half bad this year
A quick reminder of the scoring system: I get two points for a bullseye, one point for nearly right, zero for wrong, a minus one for an epic fail.
There were 11 questions, so that means a potential maximum of 22 (extremely unlikely) and a potential minimum of minus ten (also extremely unlikely).
And here, for the keener acolytes of Frisby’s Forecasts, is a link to the original article from last January.
So prediction one was based on the historical precedent that governments extend tax and control during a crisis, in a way that would never be possible in peacetime, but that after the crisis has passed those controls never revert back to what they were before the crisis began.
“We will never go back to the freedoms we enjoyed before Covid-19 came along. The precedent of the government being able to close down the economy has been set. This is the new normal.
“Whether vaccines work or not, Covid is now part of our lives. New strains of the virus will come along, some more dangerous, some less. But control of movement, testing, tracking, tracing, quarantining, vaccination, bailout money, furlough (all steps towards Universal Basic Income) even lockdowns – these are the new normal.
“Those who optimistically look forward to getting back to how we were are going to be disappointed.”
I think we can call that a bullseye. Two points.
Prediction two was to expect more inflation and money printing.
“Is 2021 the year that the economy rids itself of its drug dependency? Nope. Extend and pretend continues. Asset prices go higher. The anti-inflation narrative may get more pronounced in 2021 as more people cotton onto the racket, but the funny money is still going to push multiple asset prices higher.”
Rampant asset price inflation has not been quite as across the board in the second half of 2021 as it was in the first, but I’m still calling this as two points.
Prediction three was that bitcoin would go over $50,000, but that we would also see one of its triennial monster 50%+ corrections. We got both.
Bitcoin began the year at $27,000, went to $64,900 and then corrected 50%+ to $28,000. It then went even higher, to $69,000, and here we are today just shy of $50,000.
Two points. As I say, it looks obvious now.
Prediction four was that gold, which began the year at $1,950, would break out to new highs. Er, no. One year on, we are seven or eight percent lower.
Zero points. Actually no, minus one. Epic fail. Gold was a sell in 2021.
Prediction five was that the S&P 500 would see new records and break above 4,000 for the first time. And some! 4,743 was the high. Two points.
Prediction six was that silver would have another run at $50 an ounce and that it wouldn’t get through because of manipulation. Well, silver’s failings have certainly been put down to manipulation, but it barely even touched $30. Wrong again. Minus one.
House prices, oil, and football
And so we come to prediction seven and UK property: house prices up, office prices not so much. That’s about it. The relentless grind higher continues, while the root cause – funny money – is not addressed. Interestingly, we didn’t get the annual change of housing minister. Two points. Just.
Prediction eight was that Brent crude oil would go above $70. And it did – it was at $50-odd when I wrote the piece; it went all the way to $85 and today it sits at $72.
Another two points. I’m storming this.
Prediction nine. Not so fast, Batman. A zero pointer. I thought the chancellor would put up capital gains tax. It would be “only fair” to do so. He didn’t. Wrong. Rishi Sunak surprised me with his moderation.
Prediction ten was that sterling would “be back in the game”, go above $1.40 and retest $1.45. Hmmm. Just the one point. Sterling did get above $1.40, but $1.42 was the high back in May, since when it has ground lower.
Finally, we have prediction eleven, the Bruce-y bonus sports prediction, which was that Man City would win the league and that Fulham, West Brom and Sheffield Utd would go down. A juicy two points.
So lots of bullseyes last year and then two humdinger misses in the precious metals sector. A sort of “meh” regarding sterling, and a wrong’un on Rishi Sunak’s tax rises.
The overall score is 13.
I think that is one of my better scores. It means the bizarre inverted correlation between my predictions and my investment portfolio continues. When my predictions fare badly, as for example, they did last year, my portfolio seems to do well.
Yet when the predictions do well, it seems my investments do less so. Explain that one, Mr Behavioural Psychologist.
I’ll be back in the new year with some predictions for 2022. I hope I get them all wrong and end up absolutely loaded as a result.
Until then, have a very Happy Christmas. Enjoy it. And don’t have seconds – then you won’t feel guilty the day after.
Daylight Robbery – How Tax Shaped The Past And Will Change The Future is now out in paperback at Amazon and all good bookshops, with the audiobook, read by Dominic, on Audible and elsewhere.
Dominic Frisby (“mercurially witty” – the Spectator) is the world’s only financial writer and comedian. He is MoneyWeek’s main commentator on gold, commodities, currencies and cryptocurrencies. He is the author of the books Bitcoin: the Future of Money? and Life After The State. He also co-wrote the documentary Four Horsemen, and presents the chat show, Stuff That Interests Me.
His show 2016 Let’s Talk About Tax was a huge hit at the Edinburgh Festival and Penguin Random House have since commissioned him to write a book on the subject – Daylight Robbery – the past, present and future of tax will be published later this year. His 2018 Edinburgh Festival show, Dominic Frisby's Financial Gameshow, won rave reviews. Dominic was educated at St Paul's School, Manchester University and the Webber-Douglas Academy Of Dramatic Art.
You can follow him on Twitter @dominicfrisby
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