“Hindsight may be 20/20, but foresight is still 50-50.”
— Norman Sharief, in “The Maxims of Wall Street”
“If we have enough data, I know we can made accurate predictions.”
— Jim Simons, the world’s most successful trader
Happy New Year! The New Twenties are here.
In the first day of trading this year, stocks are up. Gold is up. Oil is up. And our portfolio at Forecasts & Strategies is up!
The big question in the minds of investors is: Will we enjoy another Roaring Twenties, or the beginning of a Great Depression and a new world war?
Who has 20/20 vision? No one has a clear crystal ball, but some forecasters have a better record than others. As they say on Wall Street, “In the land of the blind, the one-eyed man is king.”
Who Has the Gift of Prophecy?
My goal is to offer the best Forecasts & Strategies for my subscribers. That’s why I’m always seeking out forecasters and visionaries with the best track record and those who have proven their ability to accurately predict the future in science & technology, politics and the markets.
For example, in politics, American University Professor Allan Lichtman, author of “Keys to the White House,” has correctly predicted the outcome of every presidential election from Reagan to Trump.
He told me that President Trump is likely to win reelection unless he is impeached. So, all bets now are off.
Professor Lichtman has confirmed our invitation to speak at this year’s FreedomFest, July 13-16 in Vegas, on the subject, “Who Will Win in 2020: Another Surprising Prediction.” I can’t wait!
George Gilder, the guru of tech, is a successful prognosticator in science & technology. In his 1990 book, “Life After Television,” he predicted the rise of the internet and cell phones. At FreedomFest 2020, he will reveal the next stage of technology based on his bestseller, “Life Beyond Google.” See the details at www.freedomfest.com.
Forecasting the exact movements of the stock market, geopolitics and the economy seem elusive for human beings.
I have two pages of famous quotes in “The Maxims of Wall Street” about our puny ability to predict the future. (Go to www.skousenbooks.com). In addition to the one above, I have several insightful quotes below:
“No one can see ahead three years, let alone five or ten.” — T. Rowe Price
“It’s tough to make predictions, especially about the future.” — Yogi Berra
“Better to prepare than to predict.” — Hank Brock
“The best way to predict the future is to create it.” — Peter Drucker
False Forecasts Are All Too Common
Yet our never-ending failures don’t keep us from trying. On my bookshelf, I have a number of bestselling books by authors who have tried to forecast the future, such as:
“Bankruptcy 1995: The Coming Collapse of America and How to Stop It” (1992), by Harry E. Figgie, written before the booming 1990s.
“The Roaring 2000s” (1999), published right before the stock market bubble burst in 2000-03, and “The Great Depression Ahead” (2009), directly before the beginning of the “mother of all BULL markets” — both written by Harry Dent.
“How to Prosper During the Coming Bad Years” (1980) and “How to Prosper From the Age of Obamanomics” (2009), both written by Howard Ruff right before a major economic recovery.
Finding reliable oracles is difficult in today’s uncertain world, but that’s my goal for 2020.
What Could Go Wrong?
What can we expect this year? Right now, the outlook is optimistic. What could go wrong? It wouldn’t take much to send stocks spiraling down from their lofty heights. One or two singular events could do it.
If President Trump and the Republicans lose in November, expect a return to higher taxes and more regulations and a bear market on Wall Street.
Political instability in Hong Kong could spread to other provinces under Chinese control. The Middle East could see more turmoil if the price of oil declines. In Latin America, could Mexico or other Latin American countries go the way of Venezuela?
The military-industrial complex, both here and abroad, could be a source of new conflicts. According to my intelligence reports, the Pentagon is spending billions of dollars on the development of long-range nuclear warheads and hypersonic gliders that could hit any spot on Earth with great accuracy within an hour! China and North Korea have responded by creating their own weapons. Furthermore, Russia may again pose a threat with its nuclear arsenal.
Islamic terrorism could strike anywhere around the world. There’s no telling what they are planning for 2020 and beyond.
In the financial world, bond investor Jeffrey Gundlach, the CEO of $150 billion DoubleLine Capital, sees trouble brewing in the debt market, despite interest rates hovering near historic lows.
Gundlach is one of a few investors who sounded the alarm regarding the subprime mortgages that led up to 2008’s credit crisis. Unlike the Roaring Twenties a hundred years ago, the 2020s will face “real turmoil,” he warns. “We’re going to have to face Social Security, health care, all of these things, deficit-based spending.” The surprise spike in repurchase (“repo”) rates in 2019 may be an omen.
There is another concern. Interest rates in the United States and around the world are at historic lows, which may fuel another uncontrollable boom-bust cycle in stocks, real estate and the economy that will eventually lead the long-standing bull market into treacherous collapse.
Bull markets climb a wall of worry! I’m still bullish as we enter 2020, but I’ve hedged my bets with protective stops in case I’m wrong.
Meeting in San Diego This Saturday
I’ll be attending the American Economic Association (AEA) meetings this weekend in San Diego. On Saturday, Jan. 4, 6:30–8 p.m., I’m hosting a Chapman University reception in Room Mission Beach C, Manchester Grand Hyatt San Diego. You are welcome to join me. There is no charge and you do not have to register for this event.
Top 50 Economists: Check Out #41!
Speaking of economists, I received a surprise Christmas gift: I made a list of the top 50 economists since 1900. Read the list by clicking here.
I was glad to see that #41 beat out #50 (Paul Krugman).
I am not sure who is behind the Best Schools website and its listing of top 50 economists. There are so many influential economists who are missing, such as Steve Hanke, Greg Mankiw and Robert Shiller, just to name a few. But I’m happy to have made the list.
Join Me for the Orlando MoneyShow, February 6-8, 2020, at the Omni Orlando Resort at ChampionsGate. I will be speaking Thursday, Feb. 6, 9:30 a.m. about My Most Important Forecast & Strategy: When Will the Mother of All Bull Markets End? On Feb. 7, I will talk at 5:30 p.m. about The Best Offense Is a Good Defense: How to Beat the Market with My Five Favorite ‘War’ Stocks! Other investment experts who will be speaking include Bob Carlson, Hilary Kramer and Bryan Perry. Register by clicking here or call 1-800-970-4355 and mention my priority code of 049278.
You Blew It!
By Mark Skousen
I am a monthly columnist for “Liberty Through Wealth.” Last week, I wrote an article entitled “2020 Vision: What Could Go Wrong?” that created some controversy. You can read it here.
In the article, I raised the specter that, despite a great economy and stock market, “President Donald Trump and the Republicans could lose in November, setting the stage for socialist Democrats to take over and reverse the benefits of the corporate tax deregulation.”
A reader questioned calling Democrats “socialist.” He wrote, in part: “There are no socialist Democrats: the socialist tax rate is 100%. Who has proposed that? Those of you opposed to ‘socialist Democrat policies’ should send me your Social Security checks and any Affordable Care Act reimbursements you receive — or stop lying about your position.”
A point well taken. Only two prominent Democrats actually call themselves “socialist” — Senator Bernie Sanders and Congresswoman Alexandria Ocasio-Cortez.
Nevertheless, the Democratic candidates are all pushing for sharply higher taxes on the rich. The rates are not 100%, but they are moving in that direction. However, it was Ludwig von Mises who warned, “Middle of the road policies led to socialism.”
For example, Senator Elizabeth Warren favors a 70% income tax and a 2-3% wealth tax on the rich in this country. Her attacks on the super-rich get wild applause whenever she appears on the public debates.
Senator Sanders has proposed a wealth tax as high as 8% on wealth of more than $10 billion.
Sanders and Warren are two of three most popular Democratic candidates for president, behind Joe Biden.
New York City Mayor Bill de Blasio, a former Democratic candidate for president, advocates, “taxing the hell out of the wealthy.”
Perhaps the reader needs to be reminded of the lyrics in “Taxman” by the Beatles, which refers to the British government’s decision to take 95% of the people’s earnings. That was just a generation ago.
“Let me tell you how it will be
There’s one for you, nineteen for me
‘Cause I’m the taxman, yeah, I’m the taxman
Should five per cent appear too small
Be thankful I don’t take it all
‘Cause I’m the taxman, yeah I’m the taxman.”