Podcast – Episode 014 – 2018 Predictions

Around the end of every year and beginning of the next, the world is flooded with folks giving their predictions about what will occur in the coming year.

Some of these actually come true. But most are just for fun. These fortune tellers think that something might happen and because of that something else might occur. Mostly these folks are just looking for some free publicity. Which is why I hate predictions.

Don’t give me a guess. Give me some real information that I can use to make an educated guess

So what I like to do instead of to look at trends. Long term trends. I am a more Macroeconomic guy than micro if you know what that means.

And one of the folks I look up to is Jim Rogers. This guy started the Quamtum Fund with George Soros and made billions.

His whole philosophy is to see where the money is sitting in the corner and go pick it up. No need to fight for it or work too hard.

Sounds pretty good to me. So then how do we use this info

Well you look at what has been happening in the world, compare it to history and see what you see.

Stop looking at the minutia, the day to day news and look at the big picture.

These are the Top 5 Trends that will shape 2018.

Podcast Transcript

Before we get into the meat of this episode, I wanted to just say that I have been very touched by all the comments, reviews, and emails that I have gotten about the podcast. When I started I wasn’t sure if I should do it. But we did it as a way to get the option selling message out there, and from what I am hearing, you like what we have put out. So thank you for the feedback. It really makes my day.

And so to get even more feedback, I want to give you one of my new training products.

I created two last year, 1 is called Trading Hacks: 7 Ways to Be A better Trader instantly, and the other is Called Asked and Answered, which is 9 hours of me answering questions asked by people just like you about everything related to options.

You can choose which one of these you want for free.

All I ask in return is for you to leave a review for the podast on itunes. So if you have an iphone, pd or mac, just go to ituens and leave a review. Make sure to get a screenshot before you submit. Email us the screenshot and which training you want.

Or if you havea windows computer, you can just download itunes from itunes.com and then leave a review from your computer. Just email us a screenshot of the review and we will get you all squared away.

Cool. Now lets take about predictions.

Around the end of every year and beginning of the next, the world is flooded with folks giving their predictions about what will occur in the coming year.

Don’t give me a guess. Give me some real information that I can use to make an educated guess

So what I like to do instead of to look at trends. Long term trends. I am a more Macroeconomic guy than micro if you know what that means.

And one of the folks I look up to is Jim Rogers. This guy started the Quamtum Fund with George Soros and made billions.

His whole philosophy is to see where the money is sitting in the corner and go pick it up. No need to fight for it or work too hard.

Sounds pretty good to me. So then how do we use this info

Well you look at what has been happening in the world, compare it to history and see what you see.

Stop looking at the minutia, the day to day news and look at the big picture.

So Prediction Number 1 is going to be the increased usage of Artifical Intellignce.

You may not think it is that important now, but before you know it, it will change the world as we know it, more than it already has. And I am not talking about 10-20 years. I am talking 2-3 years.

I have a friend who works at Verizon in the IT dept. 1500 people just got laid off in his department, right befoe thanksgiving. And this is the computer dept. All the techies and nerds. So what happened? Did their jobs get outsourced overseas? No. a lot of the layoffs were overseas job. These folks got replaced by computers and AI.

My friend explained that now they even have computers that can write computer code. So the computers can make more computers and tell each other what to do. Yes, it is scary. But this is coming.

My friend barely escaped the layoff this time, but he knows more are coming and so he has polished his resume and is looking to jump ship. But how long can he jump? Eventually every company will do the same thing.

So what else can get replaced by AI?

Accountants, bookeepers, customer service, most of the work laywers do. Stock exchanges are now almost all automated.

There is a joke by Warren Bennis that the factory of the future will only have two employees. A man and a dog. The man will be there to feed the dog. The dog will be there to keep the man from touching the equipment.

There are already factories in countries like this.

Prediction #2: The stock market will continue to advance

Stock markets are built with an upward bias. So all things being equal a market will rise over time.

But not in a smooth line like in 2017. S&P was up over 20%. That’s awesome. But not sustainable. So I doubt we will see a 20% gain in 2018. But we have had a 8 year bull market, and I think we end 2018, higher than we started.

Volatiity will increase a little, but not much. Rates will stay low. Mainly because the US will be fighting for capital investment. Over the past few years, investor s in other counties put their money In the US stock market because it was the best place for growth at the time. That is changing. Other economies are picking up and growing more than the US. So money will start to flow out of the US and into those markets.

The Fed will thus keep rates low to keep people borrowing and spending. The new FED chair and Trump will do all in their power to keep us from tipping over into a recession. And so for at least another year, the markets will rise.

Prediction #3: Oil will be higher.

Right now Oil is trading about $61 a barrel. OPEC has cut on production and that has cauised the rise to $60. Saudi and Russia need to keep the price high for their own reasons. Saudi because they are taking their nationalized Oil Company Saudi Aramco public sometime in 2018, and Russia because their infrastructure is falling apart.

Yes the US shale folks will increase production as much as they can, and that will keep oil muted so it won’t jump to over 100. But it will be trading above 60 at year end. Overall, it should be another year of low volatility and steady moves for oil.

Prediction #4: China will continue to invest In the world and create partnerships with other countries.

Even with its billion plus population China cannot continue to be the cheap labor factory of the world. Other countries are taking over that role. So China is fighting back by investing trillions into other countries to strengthen ties and trade.

They have already spent trillions in Africa, Australia, and the Middle East. They are now luring Pakistan away from the US.

It is only a matter of time, before China will not need the US or the west and will assert its dominance forcefully.

Prediction #5: It will be a great year for option sellers.

This one was easy because it’s always a great year for option sellers.

Most of 2017 was spent selling puts and just sitting back.

Hopefully 2018 will be the same. But even if the markets change or get more volatile, since option sellers trade on a short term basis – a month at a time. We can easily adapt.

Now, some option sellers hated the market in 2017. They trade based on volatility, and if there is none, then they don’t do well.

I don’t think you should limit yourself. Youshould be able to trade in high and low volatility markets. In fact I would rather have a low vol markets because there is less risk of a major move against me. So if you had sold puts or put spreads this year, you would have done very, very well.

And I believe the Put spread will continue to work until we get some more volatility. Until then, keep selling.

Allright folks, that is all I got. I would love to hear what you think will happen in the new year. Email me your thoughts at [email protected] and I guess we will see next year how well I did.

Remember, to trade with the odds in your favor!