Market Forecasting

Only on the rarest of occasions do I offer anything resembling a stock market forecast. In the first place, I am a rank amateur in the investing world and I do not believe that investing is a game for amateurs. Second, I do not want to encourage any amateurs to get involved in a game where they play against professionals.

Anyway, the question then becomes: Who do you trust?  Who do you respect enough to allow him to guide your investing decisions? Obviously, that is a very  limited number. People with integrity top the list-- because they are less likely to offer self-serving advice. People with considerable experience who have already made their fortunes are also on the list. At the very least, I read around and do not prejudge anyone’s advice.

How have I been doing? 

Not so badly, if I dare say so myself.

Last year I saw a declining stock market and followed those hedge fund managers who were out of the market.

When Bitcoin reached the lofty price of $60,000 I joined those cranks who thought it best to unload it. A prescient call, if I don’t say so.

And a few months ago when the dollar was riding high and gold was looking more and more like a “barbarous relic” I recommended buying gold and selling dollars. You know how that one has been working out.

As for prognosticating economic trends I recall in March, 2021 that Lawrence Summers, serious Democrat and Harvard professor, explained that the Biden spending bill was going to produce inflation. Good call, one that seriously enhanced the reputation of Summers.

Now, while more and more market players thrill to the fact that we have avoided a recession and that the Fed is soon going to stop raising interest rates, Summers is more cautionary:

Former Treasury Secretary Lawrence Summers said that the US economy is still facing a recession this year, despite encouraging news in recent weeks.

“One has to be careful of false dawns,” Summers told Bloomberg Television’s “Wall Street Week” with David Westin. “I would stick with my view that a recession this year is more likely than not.”

Summers spoke a day after the latest US consumer-price index report showed a further slowdown in inflation to a 6.5% annual rate, the lowest since October 2021. He noted that evidence of “wage restraint” in the wake of a slowdown in earnings gains in December was “part of the good news” lately. 

So, the forecast is not all bad, but it is certainly not all good. Make of it what you will.