What Will Happen in 2021?
If stock market experts were so expert, they would be buying stock, not selling advice.
Have you read the market outlook for 2021 yet? As long as financial institutions have been around, you can be sure that they would have some sort of an investment outlook for the coming year. Do you know why? They need to capture your mindshare. They need you to buy or sell something. The industry and the compensation of its participants revolves around transactions.
We have long shied away from trying to figure out what will happen over the course of the next month, let alone for one whole year. There are far too many variables and things beyond our control. Unless you can tell whether it will rain tomorrow or how heavy you are after Chinese New Year, then you shouldn’t be trying to figure out what markets will do or which country will perform the best over the next few months. You may be better off seeking advice from some shamans.
If you already didn’t learn from the ups and downs of 2020 - is that market predictions are futile. If anyone had told you that markets would collapse with such ferocity in March that many strategists were calling it “a bear market worse than 2008” and then recover with amazing speed within a few months, or that oil would go to $0 (and even negative), then you should ask him or her for some lottery numbers. The irony is that any investment specialist who predicted a double digit gain for markets in 2020 would be right, albeit for many wrong reasons.
Unfortunately, these experts and those who appear in the media can always be relied on to tell a convincing sounding (but many times inaccurate) story about what happened in the financial markets today, and what will happen in the future due to the Federal Reserve/ China’s economy/ Gold/ US Dollar as a reserve/ Rise in unemployment numbers etc (fill in the blank with whatever you please). With so many places to browse for information and with a lot of financial news available for free, many firms increasingly speculate and try to push out fantastic headlines in order to differentiate themselves and compete for your eyeballs.
To use a weather analogy, invest like how you prepare for Singapore’s weather. The forecast might be sunny now, but you know that there is always a high chance for rain. Going out without an umbrella may cause you to get drenched in a downpour. As such, don’t take too much heed into why markets are moving in a certain manner and what would happen sometime in the future. The things that usually move markets are events that no-one would have expected or predicted. And a simple rule is that, there is no way to forecast the unexpected.
So when you draw up your investment plan, it is good to expect clear skies ahead. But your plan should involve a buffer or an umbrella to ensure that when rainy days come, you are well prepared.
