It’s said that hindsight is 20/20.  Now that we are entering 2020, I am not sure what that means since we always seem to be living in hindsight.

I am not one to make a lot of predictions.  I know the risks of making predictions, especially when it comes to investing. This is why I have followed Harry Browne’s advice.

Harry Browne didn’t say this exactly, but this was his general advice.  You can’t predict the future.  When it comes to analyzing your investments, don’t try to predict what will happen.  Instead, ask yourself if certain scenarios are realistically possible. If some scenario does come to fruition, are you prepared for it?  Are your investments prepared for it?

I am a follower of the Austrian school of economics.  The face of Austrian economics is Ludwig von Mises.  He wrote the book Human Action.  One of the basic premises of Austrian economics is that humans act.  This makes it impossible to predict the future because you don’t know how millions of human beings will act.

You can make decent predictions on how people will react to certain things.  Incentives do matter.  If the price of something goes up, generally speaking, the demand will go down.  If the government sets a minimum wage that is high enough, unemployment will go up, all else being equal.

But to make specific accurate predictions is extremely difficult, and it is even more difficult when it comes to timing.  With that said, I am going to throw out my predictions for 2020, just for fun. If I am wrong, this doesn’t invalidate my political and economic beliefs.  Regardless of what happens in 2020, I will still believe that the initiation of force for political or social change is wrong. I will still believe that monetary inflation by a central bank misallocates resources.

Economic Predictions

I believe that a recession will start in 2020.  I am less sure about whether the general public will know that a recession has started.  Remember that the financial crisis from 2008 actually started before that. The official recession was dated back to December 2007.

I expect U.S. stock market indexes to hit new all-time highs in early 2020, continuing the trend from 2019.  But I don’t think we will see all-time highs again for many years to come after 2020.

My biggest question is whether a dramatic fall in stocks will begin before or after the November election.

I have valid reasons for expecting a recession to begin in 2020.  The yield curve – as measured by the 3-month and 10-year yields – inverted in 2019.  If history is any guide, this means a recession should start in 2020.

In addition, there is a mess that started in the “repo” market back in September.  The Fed has had to step in continuously to provide funding.  I don’t fully understand the reason or what institutions are in trouble, but that is because the Fed is so secretive.  I do know that it is not a good sign for the economy.

The dollar will likely remain strong through 2020 because the other major currencies are so horrible.

Bitcoin should go down as measured by the U.S. dollar, but I have been very wrong on this before. I don’t expect Bitcoin to go to zero in 2020, but I expect it will lose its luster.  There is always the possibility that people will seek out alternatives like Bitcoin in a financial crisis, but I think the dollar will still reign supreme for now.  Gold will reign supreme in the long run.

Speaking of gold, I am still bullish overall.  I think the dollar price of gold could go down in a recession, but it will be temporary.  It is best just to make it part of your portfolio for the long term.

As far as interest rates go, I expect that investors will seek safety in long-term U.S. government bonds.  Long-term yields will go down until there is a genuine fear of price inflation.  If you are looking to refinance your mortgage, I think it is best to wait if you can.  And if you are looking to buy (and not sell) a house, then I think it is best to wait for prices to come down.

Political Predictions

I think that Trump will survive the impeachment saga, and the Senate will vote to not remove him from office.  It is just a question of whether they will have a full-blown trial or just a short discussion and a vote.

I give Trump a 50/50 chance of being reelected.  There are so many variables (see above).  If stocks crash before the election, his chances go way down. Even if that does happen, I don’t completely discount that he could be reelected in a down economy.  If he gets lucky and has Joe Biden as his main opponent, then anything is possible.  If Biden keeps sniffing the hair of girls while on camera, you never know.

However, that is my next prediction.  I don’t think Joe Biden will be the Democratic nominee.  He can barely survive talking for 10 minutes during a 2 or 3-hour debate.  His campaign team sighs relief when he can get through a debate or speech without saying something completely stupid.  It would be great fun to have Biden up on stage for a 2-hour debate against Trump, but I think many Democrats are realizing how bad he is, especially when it comes to speaking.  I know George W. Bush got elected sounding like a total dolt, but Biden is old and sounds like a dolt.  It isn’t a good combination.

I predict that either Bernie Sanders or Pete Buttigieg will get the nomination.  If it gets down to these two, Mayor Pete will have the establishment backing.  Bernie will not, although they can probably tolerate him better than Trump. Even though foreign policy would be unlikely to significantly change under Bernie, he does occasionally tell the truth, which rattles the establishment.

Still, Bernie has the most hardcore followers of all the candidates for the Democrats.  He has a loyal following.  His followers, for all of their faults, know that the other candidates are not genuine, and for good reason.  They don’t trust Elizabeth Warren, as they shouldn’t.  They won’t get behind any of the obvious establishment candidates.

If several candidates stay in the race for a while, this will tend to split up the votes. Bernie may be able to come out on top this time because of his devoted followers.  He is in his upper 70s and just had a heart attack, but his followers know that he is the only real deal when it comes to being a so-called progressive/ socialist.

Aside from presidential politics, I predict that nobody significant will pay a big price (like jail time) for the whole Russia hoax.  We already know that the corrupt FBI made up things for FISA warrants.  I would love to see people like Comey, Clapper, and Brennan be taken away in handcuffs, but unfortunately I don’t think that will happen.  William Barr is an establishment guy.  Maybe a few low-level people will take some blame just to make it look like someone is getting in trouble.

The good thing is, and I have saved my best prediction for last, is that I think the establishment/ deep state will continue to slowly lose legitimacy.  I think the establishment media will continue to lose trust, as they should.  I think that more people will slowly learn of these things that aren’t covered by the media, such as the Afghanistan papers and the OPCW fake reporting of Assad gassing his own people in Syria.

Even though there will be some tough times ahead, the empire is losing legitimacy.  It is also going to essentially go bankrupt at some point.  When we hit the day where interest rates and price inflation are high, the Fed will have to finally scale back.  Congress will be forced to scale back as well.  It doesn’t seem possible right now, but it will eventually happen.  That is when we need our message of liberty to be the loudest.