Episode Details

As long-time readers/sufferers will know, at the beginning of the new year I like to make some predictions for the 12 months ahead.

The bolder the prediction, the more entertaining the copy, though the less likely it is to actually happen. Herein lies the eternal conflict at the heart of so much market commentary. What is more important: getting lots of eyeballs or being right?

Today we mark our own homework. We look back at last year’s effort and we count up the points. The scoring system: 2 points for a direct hit, 1 point for a nearly right, 0 for a fail and minus 1, if the prediction is David-Lammy-on-Mastermind-level bad. 

(For those readers not familiar with David Lammy, he is a UK politician from the “everyone who does not agree with me is a Nazi” school of philosophy, who appeared on one of the UK’s flagship quizzes and was really, really bad).

I like this exercise because it demonstrates just how much perspective can change over time. While we can change strategy as events develop, the copy from last year stays and back then things looked very shaky. The stock market was imploding, and the end was nigh. Now it all looks rather better.

Next week I’ll put together some predictions for 2024, but here’s how 2023’s batch panned out.

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* Brent crude oil, then at $80, to hit three figures. We felt commodities would have a good year with China’s re-opening increasing demand. It didn’t. The highest Brent got was $95. Zero points.

* Copper would go to $4.80/lb, we said, on the same theme, and we were wrong about that too. It got to $4.30. Not quite Lammy-on-Mastermind levels of failure, but a big fat zero nonetheless.

* Yield becomes a thing again. “With choppy, uncertain markets, but sticky inflation, investing for yield rather than capital growth becomes a much bigger theme in 2023.” It seems painfully obvious now, I can’t believe it wasn’t a year ago, but a lot of investors, particularly those with lots of capital, have been quite happy to take safe 5 or 6% yields. Two points.

* S&P500. Things looked very dicey in the stock market this time last year. Many were declaring end of days. We said no such thing. It was “a classic recessionary bear market”, we argued. It looks obvious now. It wasn’t then. The S&P500, 3,800 at the time, would get back towards its old highs of 4,800. It has done just that. We are at 4,770. A big fat two points.

* Emerging Markets outperform, we said. They didn’t. Zero. 

* Biotech becomes a thing again too, we said, thinking that after so many years of underperformance, perhaps it was due some time in the sun. Nope. While it has been extremely strong these last two months, it was flat over the year. Zero. (Don’t worry the predictions get better).

* European banks have a good time of it too. They did. Up somewhere between 15 and 20%, depending on which measure you use. Even Deutsche Bank is up. Two points.

* Bitcoin has a good year. Hard to think it was $17,000 a year ago. ”There are so many reasons to be bullish about bitcoin, yet