Contrarian Indicator: My Perfect, 7-for-7 Forecasting Record
Want to make a fortune?
Don’t follow my advice.
Do the opposite.
In the interest of full disclosure, herewith are all the market calls I got wrong the last few years (in my defense, so did almost every other so-called “expert”):
1. Stocks:
Prediction: ↓
Actual: ↑
Explanation: the only game in town. It’s lonely — and expensive — being a bear in a rising market (never mind short seller). While the nasty correction underway has everyone’s attention, at only 10% off their all-time record (at least so far), stocks are still dramatically higher than before all the post-2008 monetary stimulus (zero percent interest rates, Quantitative Easing, Operation Twist, etc.).
2. Interest Rates:
Prediction: ↑
Actual: ↓
Explanation: I took the Fed at its word — that it wanted to get out of the monetary stimulus racket (code word: “taper”). Bet #2: even if the Fed wanted to keep interest rates down, skeptical markets wouldn’t keep cooperating. Wrong on both scores. The stock market tumult since Jan. 1 has driven the 10 year U.S. bond — a key benchmark for mortgage rates — below 2% (see, #3. Bonds”).
3. Bonds:
Prediction: ↓
Actual: ↑
Explanation: See, “#2. Interest Rates.” Because bonds and interest rates move inversely, this isn’t really a separate forecast.
4. U.S. Dollar:
Prediction: ↓
Actual: ↑
Explanation: Since when is printing money by the trillions good for a currency? Answer: when all the other central banks are printing even more.
5. Housing — NYC:
Prediction: ↓
Actual: ↑
Explanation: If any housing market looked frothy two years ago, it was Manhattan’s. What’s happened since? Higher still, both literally and figuratively, with a wave of skinny, +1,000 foot residential skyscrapers selling condo’s for $50 million (and higher!) apiece.
6. Oil:
Prediction: ↑
Actual: ↓
Explanation: Fill your tank lately? Adjusted for inflation, today’s $1.75 a gallon is cheaper than the 25¢ it cost in the 1960’s. Attributed variously to fracking, the strong dollar, the weakening Chinese economy, the prospect of Iranian oil coming back on the world market, and/or a game of chicken between OPEC producers and everyone else.
7. Gold:
Prediction: ↑
Actual: ↓
Explanation: a safe haven and play on debased currencies (see, #4. U.S. Dollar”). Strong dollar, stocks = moribund gold.
Of course, all of this is hindsight.
So, what am I predicting now?
“President Donald Trump.”
P.S.: Should that ever come to pass, I further predict that wiseacres will take to calling Trump “el Presidente” (same as the leaders of banana republics).
See also, “Contrarian Indicator”; “Contrarian Indicators ” Housing Market Edition”; “Successor to “The Magazine Cover Indicator’: The WSJ Diss.”
