This is the time of year when firms trot out their annual Year in Preview outlooks.

These are counter-productive exercises for investors. First off, most are little more than guesses. I mean that literally — there is no valid science in estimating stock prices, interest rates, inflation, bond yields, gold, bitcoin whatever — 12 months out.  Not only that, but these provide little in the way of guidance for the long-term goals of retirement, generational wealth transfer, paying for college, buying a house, etc.

What we get instead of smart long term advice is something geared towards transactions. Even today, that has become weird, as trading commissions are (mostly kinda) free. What these forecasts do today is act as a glossy advertising campaign designed to attract new clients — not help existing clients.

Predictions, as I have said repeatedly over the years, are nothing more than marketing.

Consider: How many strategists had “Global Pandemic, one million deaths, 34% market crash, but with huge gains in FAANMG stocks and a 12% annual S&P500 gain” in their 2020 Outlooks? None.

The future is both unknown and unknowable. Don’t blame Covid — wars, pandemics, natural disasters and other tail risk events are a feature, not a bug. The unprecedented occurs with alarming regularity. This is why the forecasters never stand a chance over the course of a year.

Ever wonder why so many forecasts cluster around the same points? Many forecasters simply take current price levels, extrapolate an average annual gain (e.g., 8-10% in equities) and anchor their forecast around that. This helps to explain why so many outlooks appear so similar — its  simple extrapolation.

And, I say this as someone who has gotten somme pretty big calls pretty right. I only wish I could tell whether it was skill or luck (or both), but that determination is beyond me.

Here is my outlook for 2021: We will all be even more sick to death of lockdown, more bored silly working from home, and damned tired of re-living the same Groundhog day over and over again. I predict Covid fatigue is no joke: it is real, and dangerous and frustrating as hell. At least there is some light at the end of the tunnel, with at least 3 vaccines in the late stages of approval. With a little bit of luck, maybe life begins to return to normal next summer.

I challenge you to find a more truthful 2021 outlook.

Previously:
Predictions and Forecasts

The Halfway Point (November 20, 2020)

“Unprecedented” Uncertainty (June 9, 2020)

Forecasting is Marketing . . .  (January 24, 2015)