So, in the spirit of making predictions that will actually come true, here are my Top 10 predictions in order of certainty. In other words, Prediction #10 is pretty-darn-certain to happen while Prediction #1 is absolutely guaranteed.
#10. Volatility will remain
The stock market, the bond market, the commodities markets, the geopolitical landscape, pretty much all endeavors where people are involved are volatile – some more than others. This is a feature not a bug.
#9. Sectors will rotate
The S&P 500 has eleven sectors (technology, financial, real estate, health care, etc.), and guess what? Various sectors fall in and out of favor and therefore their returns will be all over the map. Market prognosticators will give a reason as why this happened...but always after-the-fact.
#8. Congress will continue to be a lightning-rod
Why? Because 535 people come from all over the country having all different agendas. However, the one agenda they all share is wanting to get reelected.
#7. The business media will continue to talk about what the Fed is going to do next
Economists enjoy talking about when the Fed is going to lower or raise short-term interest rates. Why? Because it gives people the idea that some so called experts know what the Fed is going to do - the secret is, they don't. Predicting almost anything related to the economy is next to impossible. My advice is to get comfortable being uncomfortable.
#6. There will be earnings disappointments
Some companies will do worse than expected. Some will even go out of business. Some will disappoint and then surprise in the future.
#5. There will be earnings surprises
Some companies will do better than expected. Some of these companies will buy other companies. Trying to predict which companies will continue to do well is harder than understanding quantum mechanics. Capitalism is fierce, tread lightly.
#4. The housing market will change
Mortgage rates, lending standards, building permits, and employment all effect the housing market and these 4 inputs are always changing so it’s nearly impossible for housing not to change.
#3. The U.S. dollar will fluctuate
Many factors affect the movement of the U.S. dollar and it's virtually impossible to predict the direction, but many will try. Don’t be one of them.
#2. Patient long-term investors with a well-thought out plan will do well
Past performance of course will not guarantee future results, but it is a pretty-good indication of what the range of outcomes will likely be.
#1. My team will continue to serve you in a fiduciary capacity
As always, we believe that making decisions based on evidence rather than predictions will give you the best odds of success. Together, we will help plan, build, and execute a financial roadmap that will allow you to live on purpose. And that is one prediction that is absolutely guaranteed.
Paul R. Rossi, CFA