The Lesson Of 2020: Don’t Bother With Predictions For 2021
Thinking back to this time last year, could anyone have predicted the events of 2020? The answer, of course, is no. Last winter, markets were preoccupied with the booming economy and record low unemployment in the United States, phase one of the U.S.-China trade deal and the global impact of the assassination of Iranian IRGC commander Qasem Soleimani. By January 2020, we knew about the coronavirus in Wuhan, China that some were calling “novel,” but even the economic impact seemed limited to China and its role in the global economy, until we saw otherwise.
Even U.S. health leaders like Anthony Fauci told us there was little to worry about from the virus here and that the risk in the U.S. was “miniscule.” The memory of this time last year should be a warning: ignore predictions.
This column, which shies away from predictions, forecasts and soothsaying, remarked in February of 2020, “If the outbreak is severe enough, we could see a recession that will take on its own life.” Ok, not bad, but not great. There was no way to envision global lockdowns that shook every major economy with the possible exception of Sweden’s. But that same paragraph went on to describe the impact of curtailment of travel to and from China, as if China was the only spot that would face strict government control. I was listening to the so-called experts, like Fauci, who work as career health officials in the U.S. government. It was a mistake to build perception based on their guidance.
Remember this, especially when someone tells you this week or in the first week of 2021 that the price of oil will hit $65 per barrel in 2021, or that oil will end 2021 at $70 per barrel. Remember that that someone is guessing. When someone tells you that the S&P 500 will hit 4000, remember that that someone is guessing too. The truth is that on this New Year’s Eve—as on every New Year’s Eve before and every New Year’s Eve that will follow—we hang a new calendar and head into the future with no certainty.
Happy New Year.