Update: Here’s What I Got Wrong … and Right
- America’s 121-month economic expansion recently eclipsed the previous record.
- I was early with my call for the Federal Reserve to cut interest rates in 2019.
- Some of my predictions have yet to pass, but there are six months left for these to come true…
The decade is 95% over.
Let that sink in for a moment.
The decade that saw smartphones, Instagram and Snapchat capture our attention … on-demand taxi services at the press of a button … and a real estate mogul and reality TV star as leader of the free world … is coming to an end.
Since the final year of the decade is halfway over, it’s time to revisit the predictions I made in December to see what I got wrong, what I got right and what the jury has yet to decide on.
Predictions That Didn’t Pan out as Expected
Let me first talk about where I was off.
I thought we’d be in a recession by now. I believed the positive impact of the tax cuts would wear off in the first quarter and that the U.S. was headed for a short, sharp recession.
I was right about the tax cuts wearing off. Economic growth has slowed. However, we’ve avoided a recession (thus far) and recently broke the record for the longest economic expansion in U.S. history.
The ongoing 121-month expansion that started in June 2009 recently eclipsed the previous record expansion from March 1991 to March 2001.
Although growth has been muddling along in the 2% to 3% range over the decade, it hasn’t turned negative … yet.
In line with that call, I also believed the market would fall into bear market territory this year. But we’d already arrived there in late December, as the S&P 500 Index plunged 19.9% from its October highs.
My timing was a little off, as it was with my call that the markets would force President Donald Trump and Chinese President Xi Jinping into a trade truce by February. While a truce didn’t come in February, both sides are now headed in the direction of a settlement.
Oil also hasn’t headed into “the $30s on fears of a slowing global economy.” While global growth has slowed, recessions have been avoided, and the price of oil continues to trade around $60 a barrel.
Those are the predictions I will admit didn’t pan out as expected yet. When they do come around, though, I’ll have a few recommendations to steer you through it all.
Here’s what we got right…
Here Are Our Wins
“The Fed will not raise rates in 2019, and perhaps will even cut them.”
Current Fed funds futures imply a 100% chance the Federal Reserve will cut by at least 25 basis points by the end of the year, and an 87.7% chance the Fed cuts by 50 basis points.
There’s even a 1.7% chance of a 125-basis-point cut. This is something we shouldn’t be wishing for, as it would likely mean financial Armageddon has arrived.
I was early on this rate cut call, and changed my stock market outlook to bullish shortly thereafter. If there’s one thing I’ve learned over the past decade, it’s when rates go low, stocks go high.
I predicted that “at least one U.S. Democratic candidate mentions universal basic income as part of their presidential platform.” Thank you to Democratic presidential candidate Andrew Yang for handing me the win on this one.
If the Fed can print infinite amounts of money, it was only a matter of time before a politician suggested we should just start “making it rain” on every citizen.
“Uber and Lyft launch initial public offerings into the bear market, taking 20% haircuts on valuation. Uber raises $10 billion at a $100 billion valuation.”
This prediction was an easy one, as both companies were preparing to go public this year. However, most investors didn’t expect Uber to price at an $82 billion valuation. I’ll collect the fare on this one.
“Scaling solutions such as ‘sidechains’ and the Lightning Network allow bitcoin to be transacted faster and cheaper than credit cards. Starbucks becomes the first global merchant to accept bitcoin as payment through its app.”
I’ve been bullish on bitcoin for longer than I’d like to remember.
Also, it wasn’t Starbucks that drove this rally; it was Facebook’s libra coin. You might be buying a grande peppermint latte with libra using WhatsApp this Christmas season.
There Are Still 6 Months Left in 2019
Some of my predictions are still undecided, such as protein-folding supercomputers finding cures for untreatable diseases, a broad U.S. infrastructure plan and a 21st-century space race paving the way for faster wireless networks. But there’s still time.
I did, however, tell readers to buy shares of supercomputer maker Cray Inc. in our May issue of Automatic Fortunes.
Within a few weeks of our issue going to press, Hewlett-Packard stepped in and purchased Cray for a 30% premium to where the stock was trading. So my readers bagged a quick 30% gain.
Sometimes you can be right for the wrong reasons.
Editor, Automatic Fortunes