Welcome Passive Traders to another exciting episode of the Option Genius Podcast. This episode, we’re going to be talking about 2020, the next decade and what’s going to happen, or what I think is going to happen. Now it’s called the prediction episode. And I hate predictions, mostly because most of them are, you know, wrong and people are pulling stuff out of thin air. But ive done this for the past 2 years and they have been very popular episodes, so lets make it a yearly thing.
Now keep in mind that this is just my interpretation of things to come. I might be right, I might be wrong. That is not the point. The point is to hone in on trends. If you can spot a trend coming before anyone else, you can make a lot of money. Or even if you spot it in enough time to ride it, you can still make a lot of money.
And as they say in trading, the trend is your friend. So the trends will probably continue. So if we can identify these trends, especially if they’re long term, if they have been occurring in the past and they’re going to continue to occurring. Then those are things that we can actually benefit from in a financial sense. Right? So for example, the aging population of the United States, more and more people are getting older. The boomer generation is older. That one trend.
And so there are ways to monetize that, if you want to. I have a friend who own several nursing homes, and they are turning customers away. They cannot build those places fast enough. That is the type of trend that’s not going to just be a flash in the pan, and just go away in a few months, but something that’s going to continue for a long term. Those are the types of trends that I would like to identify. Those are the trends that I would like to invest in. And just, put your money in and take advantage of this over, and over, and over again where you don’t have to watch it, and monitor it, and really be more passive about it.
So before we get into the predictions of 2019, let’s take a look back at what I said was going to happen in 2018, and see if I was actually right, or if I have egg on my face. So Predictions for 2019:
1. Higher interest rates
Hmmm, this one ending up being wrong. Most economists will agree that rates should have been raised, and they were, but then they were cut again. The Fed and Powell bowed to the power of Trump and cut rates saying that they did not see any inflation. I guess they don’t buy their own groceries, because anyone that does can tell you that things cost a lot more than they did.
And now we have Powell making statements that rates will be stable for at least half od 2020. Which is great for borrowers because they are super low. The huge 2019 rally was due for the most part because of the reduction in rates. It was a fed rally. So if they stop cutting, I don’t know what that does to the stock market. Maybe we end up moving more sideways.
But I predicted higher rates in 2019 and I was wrong on that one.
2. Recession in 2019
I also predicted a recession in 2019.
Wrong here too. We actually had decent growth in the economy and a booming financial market.
What happened? Well central banks around the world all decided to cut rates, and that boosted the economies of many countries. Some are still struggling, but here in the US it was enough to keep the growth happening.
Do we get a recession in 2020? That’s the question now. A recession is coming, weather it is in 2020 or beyond, we will get one. But since 2020 is an election year and Trump will do anything he can not to lose, I do not think we will have a recession in 2020, or at least it wont be declared until after the election.
Many that means cutting taxes for the middle class, or more subsidies for certain industries or more trade agreements…but Trump hates to lose and he will do his best to keep the economy humming until the election. At this point, a recession might be the only thing that can defeat him.
3. Was a Stock market lower
Wrong here too. US stock markets were up over 25%. Wow.
Hope you enjoyed the ride because that will not happen again in 2020. Companies bought back lots of stock and low rates kept pushing stock prices higher.
I think the markets will still be higher in 2020, but not 25%. As long as it keeps moving higher, even by just a little means all time record highs.
4. More legalized marijuana.
I was right on this one. In fact it would be hard not to be. States need cash and taxing weed sales is one way to do it. Legalizing sports betting is another which is also happening, although slower. One thing that is not happening is people making a killing with weed stocks. 2018 was the year that financial newsletter publishers were hitting us over the head screaming about how weed stocks were going to make us all billionaires….guess what…didn’t happen.
Many weed companies actually went bust or were bought out for pennies on the dollar. Private weed companies are still doing well, if they are managed properly. But their problem is that they have to deal in cash for the most part. Until that changes, investing in weed stocks is going to be a crap shoot.
5. Real estate prices to drop. Home prices actually rose 3.3% in 2019. And although that is lower than the 5% they rose in 2018, it is still enough to make me wrong on this prediction. That’s good news overall. So I will be happy to be wrong on this one. As long as rates are low, real estate should slowly appreciate.
Once interest rates start to rise though, sales might slow down and then as they continue to rise, real estate prices might stall or even decline. It all depends on how fast rates increase. And if we start seeing greater than expected inflation.
Those were the predictions I made in 2019. In 2018 I said a couple things that are still coming true which are that AI will be everywhere and that China will be more independent.
AI is impacting ALL jobs not just the repetitious ones. Computers are doing better jobs than doctors at detecting Cancer and Judges at deciding if a person accused of a crime should be allowed out on bail.
Your job will be impacted as well if it has not already. And so generating income from multiple sources, included trading is more essential than ever before.
10 years ago China would not have been able to stand toe to toe with the US in a trade battle. Probably not even 5 years ago. But in 2019 they held their ground. We will see in 2020 if we get a full trade agreement but make no mistake, China is growing stronger and will soon take over the US as the strongest country in the world both in economy, technology but also in military strength. That might take the longest but with the way they are buying Allies and we are alienating ours, the tables will turn.
Ok, so what does my crystal ball show for 2020?
- Volatility will increase.The 15-18 level used to average for the VIX, for the last few years under 15 has been the norm. But that will change. The effects of the Great Recession as melting away. Inflation is rising, interest rates will rise and that will make the stock market more choppy. I think this will happen in the second half of the year and the election will help it along.
- Stocks will drop no matter who becomes President. They will rally slightly during the year as long as interest rates are not increasing, but once the election is over we will see a drop. If Trump comes back, he will act more erratic. If a Democrat is elected, that will mean more regulations and a move towards being more eco-friendly. But the election might just mark the end of the bull market. It has gone on for a long time, and I hope it keeps going, but it has to end eventually, and that is as good a catalyst as any.
- 2020 will be the year of the electric car. Tesla has gone mainstream. Porsche, Volkswagen Audi, Ford, BMW, Jaguar and others are already trying to compete with it. And at least 14 more models will be introduced in 2020 including from GM. It is not rare anymore to see an electric car in most major cities. And they will become more commonplace. This has caused resale values of luxury cars like BMW, Mercedes and Lexus to plummet. The next combustion engine car you buy might be your last.
- There will be an increase in computer hacking As computers take away more and more entry level jobs that does not leave much for youngsters to do besides goof around on their computers…sure they could protest and stage revolutions, but it is easier to learn to become a programmer and way more lucrative to become a black hat hacker. And we will see more companies having data breaches, the election will have all sorts of fake ads, news releases, stories, accusations from unknown sources that are made viral using fake accounts, and all that.
And here are some long term predictions –
- Medical expenses will continue to rise in the US, until we model the healthcare system in Europe and offer standard care to everyone. I don’t know what they will look like exactly, but the insurance system is broken, costs continue to rise, and that is causing the people in the US to die earlier. The US is the only western country in which the average age of death has gone down over the last couple years.
- Recycling will be stopped. Maybe not entirely, but the way it is now portrayed as a way to protect the environment will have to change since it is not working. For example, you know that you can recycle a plastic bottle. But did you know that in order to recycle it, it needs to be washed and have the little plastic ring around the top removed? Otherwise it is just tossed in the garbage at the recycling plant. Recycling is too labor intensive and so the move towards more natural products and fibers will continue.
- There will be more refugees streaming across borders due to economic hardship, civil wars, flooding, and lack of food and water. Global warming continues and people will move in greater numbers to find a better place to live. This will cause massive upheaval in the current system of Countries and borders that we have now.
Well, that’s it for me this year. A personal prediction is that I will drive my current card until it dies, which might happen in 2020, and when it does I will be switching to a Tesla. I am looking forward to that.
I hope that you have an amazing 2020. If I can be of any service to you, please reach out, and let me know what predictions you see in your crystal ball. As I said earlier, knowing what trends are happening is a great way to build long term wealth.
May The Odds Be In Your Favor.
Happy New Year