At the beginning of the year, I did a silly thing. I made a bunch of predictions for the year. This blog has a pretty strong record of predictions over the years, but I had never fallen for the nonsense of making topical annual predictions…until this year.
Now, the thing about making predictions is most people only call out the ones that work or pretend they never made any and hope not to get called out. That’s not how we do things here. I hold myself accountable.
I am pleased to report that the batting average was pretty good, so let’s roll tape and see how I did and maybe I’ll throw in a few new ones for 2023 as well.
I suggested Covid would fade as a story last year. That was arguably fairly easy, but still chalk it up in the WIN column.
2023 Call: China is clearly going to be hit hard. I’ll step out though and say they spawn a new variant that ends up spreading worldwide and we have one last big debate over masks, boosters, etc.
This one is mixed. I said growth would disappoint and inflation would likely move to services, but arguably GDP growth has held in fairly well. It’s more earnings growth that has come up short. Call it a toss up.
2023 Call: Earnings again are the easier call. They will be down year over year. There are growing reasons to believe the Fed will force a recession though it likely doesn’t become official until the second half.
This was my big miss. I thought the Fed would lose its resolve and only hike once. Big LOSS.
2023 Call: I think the Fed call option is still in place. This means the Fed isn’t worried about the market going down, but it will stop it from going up too much by continuing to raise rates until the economy breaks. Whether they get all the way to 5% or not is unclear, but I don’t believe they will be cutting this year unless there is some traumatic event (in which case you wouldn’t want to own stocks here).
This was probably the biggest WIN. I called for the collapse of the crypto bubble. Nailed that one.
2023 Call: Crypto continues to slowly die. It may not fully expire and there could even be a short lived, powerful rally at some point, but it’s over. When bubbles die, they die.
I predicted no red wave, partially because I anticipated the abortion ruling (not because I am a legal expert but because betting markets forecast it) would change turnout. While I did technically say I thought Republicans would hold small majorities in both houses, I think suggesting it would be a lot tighter than expected was the non-consensus call and thus a WIN.
2023 Call: Nothing stands out, but it will likely be a year where hotspots continue to rise. There are eerie similarities between now and the late 70s, from Iran unrest, Russia bogged down in a foreign war, and China having a dictator facing a major crisis.
Bonus early prediction for 24 = Trump runs as an independent. File that one away.
In the main prediction piece, I called for flat to down stock prices = WIN. In the earlier piece, I said watch for when the Fed takes away the punch bowl and the time for great concern would be when the 10 year Treasury approached 4% (which it now has). In the subsequent piece, I called tops on pretty much everything: Tesla, Apple, AMC, Bitcoin, low interest rates, etc.
2023 Call: Stocks may go up a little next year, but don’t get too excited. Stocks rarely bottom before the recession arrives. That means something like a +5% year may be a -25% 1H followed by a +40% 2H. I don’t think we’ve seen the bear market lows.
Fairly mixed results here. I anticipated higher loss costs which happened in personal lines, but did not spread to commercial. I also suggested a light cat year and certainly didn’t foresee a hard cat market, so I guess I’ll be a strict grader and call this a LOSS.
2023 Call: We know cat pricing will be strong, so I won’t count that. I think you will see core commercial lines prices roll over though in response to strong recent results and higher investment yields. This may prove unwise if loss trends do accelerate, but it’s going to take some time to figure that out and I suspect growth will become a bigger priority.
I gave some small predictions about the MLB strike and the Olympics which didn’t amount to much. I also was wrong about the Packers winning the Super Bowl, though I did nail Georgia upsetting Alabama for the college championship. Still, that’s not enough to rescue things so I’ll call this a LOSS.
2023 Call: The NFL playoffs predictions will be out once the playoff field is set.
Finally, I went out of my comfort zone and suggested people would be done with Netflix, Peleton, and other Covid trends. I think that’s probably good enough to score as a WIN.
2023 Call: Don’t think I have much to add here other than there will be more general caution due to recession fears which will likely inspire some trends.
So, if you tally it all up, I went 5-3-1. Not bad. The one big miss was the Fed. The big wins were all the related bubbles finally ending.
I’ll have more to say on some other predictions next week and then the week after that will be NFL playoff predictions and then it will all be out of my system and we’ll return to talk about hard markets and other fun things.