Invest-ability Bulletin 03/12/21: I Predict a Riot

It might pay to think outside the box when thinking about what might happen in the year ahead

It’s that time of year when the financial services industry’s PR departments start trotting out their predictions for the economic and investing year ahead.  I don’t think it would be unfair to suggest that most of them will say much the same thing as everyone else’s and can be safely ignored if you’re looking for an investing edge.

Ok, that’s slightly unfair – I’m sure most of the many thousands of words of outlook will be based on rigorous research and experienced readings of the market, and some of them may indeed turn out to be true, if somewhat aligned to a safe consensus (like most investment research, sadly – broker sell ratings remain a rare sight, for reasons Phil and I recently discussed on our podcast).

But if the last couple of years has taught us anything, it is that anything can happen, and the consensus can be proved wrong very quickly – 17 out of 20 analysts had Nasdaq listed Docusign at a Buy or Outperform before its shares collapsed 40% today on weak guidance (even the 3 holds look rather silly now).

Indeed, if anyone had predicted two years ago that I would now be sitting at a kitchen table in a rented cottage in Suffolk working for myself, I would have put the odds at close to zero – similar to the odds I would have given that a government minister would actually be telling people not to play tongue-hockey with strangers under the mistletoe this Christmas. Real life throws funny and not-so-funny things at us, profit warnings and pandemics among them.

Perhaps that’s why I’ve always had a bit more time for Saxo Bank’s annual Outrageous Predictions than most of the other, more formulaic approaches to prediction-making. Not because it has a particularly good record of predicting what may happen next year – it didn’t predict a global pandemic for 2020, and the solar flare it said was coming in 2019 is yet to wipe out earth’s communications infrastructure – but because its predictions encourage us to think outside of the safe consensus, which is where life often takes us anyway. As it puts it, it’s looking for “eureka like moments that trigger a change of thinking, a change of behaviour and a rejection of the unsustainable status quo.”

With that thought in mind, this year’s predictions – based around the theme of ‘revolutions’ – don’t actually seem that outrageous at all when you consider what the world has been through in recent years. I’ve already written about three of its predictions myself: the potential “Facebook faceplant”, the “rain check” on decarbonisation, and the potential for a “wage spiral”. We certainly need some sort of revolution to deal with the glaring inequalities in society that, as Saxo points out, just seem to be getting worse and worse. The peasants may soon be revolting. 

And as markets struggle for oxygen at the summit of record highs, my over-riding suspicion is that we are in for quite a 2022 and that investors will need to think outside the box more than ever. Saxo’s outrageous predictions may be a good place to start, along with a well-diversified portfolios to make sure that if any of them do come true your wealth won’t be wiped out.

Enjoying this article?   

Join our list for more quality insight and analysis. No spam, unsubscribe any time.

%d bloggers like this: