This is my last Money Morning of 2015.
So I’m going back to the first to review the predictions I made for the year ahead.
There are some proper bullseyes – and some howlers. What’s most interesting is how the investment landscape has changed.
So let’s get stuck in…
How a review can give you a sense of perspective
I find these reviews a valuable exercise. It’s useful to go back and see what you were thinking a year ago, and compare it to where the world is now.
You don’t really notice change when it happens gradually over time, but today the backdrop is quite different to 12 months ago.
And investment trends can change quite significantly in just a couple of months – my big miss came with the collapse of commodities in the summer. I did not see that coming at the beginning of the year.
The rules, remember, are that I score two points for a hit, one for a near hit, nothing for a miss, and minus one for any howlers. The system is not perfect, but it is simple.
I make my predictions quite specific, so it’s likely that I’m going to get them wrong. They’re more for fun than anything else. As a trader-investor, I very much reserve the right to change my mind as events unfold.
1. Gold: 1 point
Gold began 2015 at $1,175 an ounce. I declared that the high for the year would be $1,350 and the low would be $1,050. We have half a bullseye. $1,050 was indeed the low for the year (so far). We got there last week. How about that for a call? The high was $1,302 – so I missed that one by $50. One point.
2. Gold miners: –1 point
This was my big howler. I thought the XAU (the index of the 16 largest gold mining companies) would go above 100, while the HUI (the largest unhedged gold companies) would go to 250. The XAU only got to 83 and the HUI to 211.
The clanger was that I had 60 and 145 as the lows, when they came in at 43 and 104. I thought the falling oil price, coupled with the strong dollar and weak local currencies, would make gold miners more profitable and thus more desirable. That didn’t happen. Minus one point. Epic fail.
I’m cautiously bullish now, by the way, after that summer wash-out – as long as gold can stay above $1,050. More on that next week.
3. Sterling: 1 point
With “cable” (the pound-dollar exchange rate) then at $1.56, the call was for a high of $1.62 and to “break last year’s lows of $1.48” and “head below $1.45”. The high was $1.59 and the low was $1.45. So not bad. Nearly, but not quite. Do I give myself a point? Not sure. Oh, just about I suppose…
4. The euro (vs the dollar): 0 points
Here’s what I said – (the euro was at $1.21 at the time): “The euro’s low for the year is somewhere near $1.08. Its high will be in the $1.30-$1.35 zone”. The low was actually $1.05 – so “somewhere near” – while the high came on 1 January at $1.21. Not bad on the downside targets, but overall we’ll call that a miss, as I was a bit generous on sterling. No points.
5. Interest rates: 2 points
The call was for no rises here in the UK, with the added remark, “if they’re going to rise anywhere, it will be in the US”. Two points. It seems obvious now, it wasn’t in January – the consensus was that they would go up. I even had a bet with someone on Twitter about it. Two points.
6. Oil: 1 point
Quite pleased with this one. Here’s what I said (West Texas Intermediate was $54): “Can oil go as low as $35? It’s possible. But $70-$75 also looks possible. Let’s say a low of $40 and a high of around $60”. The high was $61. And, of course, we hit $35 last week. Tempted to give myself the full 2 points. But I’ll stick with one.
7. US stockmarkets: 2 points
Again fairly pleased with this call. Here is the comment: “After a bonanza couple of years, the major indices – even the seemingly impervious US exchanges – all look a bit dodgy… I can’t decide if I’m a bull or a bear. But my prediction is that the Nasdaq will be a stand-out performer, managing a re-test of its old, year 2000 high.” The indices shared my ambivalence and went pretty much nowhere. But the Nasdaq outperformed and did manage a retest of its 2000 high. Two points.
8. FTSE 100: 1 point
The FTSE began the year at 6,600. I suggested a high of 6,900 and a low of 6,000. The high was 7,100, the low 5,900. Close on the lows (100 points), not too far off the highs (200 points). Can’t decide whether to give myself a point or not. I’ll fiddle myself one point here.
9. The general election: 0 points
I thought we’d get a Tory-led coalition of some kind. Got that wrong. Though I was right to predict a lot of “twists, turns, fear-mongering, gerrymandering, tactical voting” and “devious manipulation of statistics”, but “socially, nothing much would change as a result”. Nothing has changed, so right there, but nul points all the same.
10. The EU: 2 points
“A lot of noise, a lot of panic, a lot of blame-throwing – but the EU somehow stays intact for another year” is what I said. And that’s what happened. Not so sure about that for next year though. Two points.
11. UK house prices: 2 points
The call was for continued atrophy in both price and activity at the top end (above £1.5m), a pick-up at the low end, with the added statement of extreme bearishness about so-called high-end London new build. That’s been pretty much what has happened. Two points.
12. Footy bonus: 1 point
Chelsea would win the league, while Leicester, Burnley and Hull would go down. Three out of four.
Tempted to give myself two points, but we’ll go with one. And here’s why: back in August I wrote a mid-year review of my New Year predictions in which I uttered possibly the biggest clanger of my life. I said Leicester would “go down next season. I’m not sure Ranieri is the right man for the job”. For those that don’t follow footy, Leicester are top!
So overall, not a bad performance. One real howler, Leicester aside, and that was the gold miners. A few bullseyes.
The maximum score is 24; the minimum is minus nine. I make it 12 points, although my marking is a bit wishy-washy. I could manipulate it up to about 15, maybe, or down to ten if I was feeling negative about myself. We’ll go with 12.
I’ll be back in January with some predictions for 2016.
In the meantime, have a very merry Christmas.
Category: Market updates