I never could have predicted what happened in the year 2020, so perhaps making predictions is futile. However, predictions aren’t only for fun. They also don’t necessarily have to be accurate to be useful.
One thing that Harry Browne wrote about in his book Fail-Safe Investingwas to take predictions and test them against your portfolio. In other words, if you read a good article that seems plausible, predicting a stock market crash in the near future, you don’t have to base your decisions on whether it will be true. You need to base your decisions on whether you are prepared if it does come true.
The same would be the case for a lot of scenarios. If someone is predicting a new great depression, or a monetary crisis, or massive inflation, or a spike in interest rates, or all of the above, you should look at your portfolio to see if it will hold up if the person’s predictions come true.
The same goes for life. While your investment portfolio is important (if you have one), your overall quality of life is even more so.
So when we talk about predictions for the coming year or the different possibilities, you can derive benefit whether they come true or not. It is best to ask yourself if you are prepared if one or more things does come true. This preparedness applies mentally, physically, emotionally, and financially.
Politics
My first prediction is that Joe Biden will take office on January 20, 2021. I know that Trump and many Trump supporters are still contesting the outcome. I have little doubt that there was significant election fraud in the big cities in swing states. This is especially true for Atlanta, Detroit, Milwaukee, and Philadelphia. There were also a lot of unlawful changes made in states prior to the election regarding mail-in ballots.
I know there will be objections in the Senate coming up. I know some Trump supporters have laid out a path to victory. But the entire establishment is against Trump, and I don’t think he has the structure in place to overturn the currently reported votes in the swing states.
If I am wrong and Trump ends up staying in office, then all bets are off the table. This would change everything. There would be mass rioting. There would be a doubling-down on the virus hysteria, if that’s even possible. So if something happens over the next few weeks where Trump is actually victorious, then prepare for total chaos. I give it less than a 5% chance though.
Assuming Biden takes office, I don’t think he’ll last long. How many people are cringing every time he is live on camera? He can’t get through more than a couple of minutes without sounding stupid or lost in space. I don’t see how he will give a coherent State of the Union address, but maybe they’ll drug him up and he can surprise me.
They’ll let Biden take a spin on Air Force One and take some nice family pictures at the White House. Maybe they’ll let him meet briefly, in a controlled environment, with a few foreign leaders. Overall, they’ll try to limit Biden’s time speaking in front of a camera to as little as possible.
It’s hard to say if he’ll last a year or a couple of years. I highly doubt he will last for the full four years. I give it a better than 50% chance that we will see a president named Kamala Harris.
When the time comes, Biden will graciously go before the cameras and state that he is stepping down due to health reasons or family reasons. I’m just not sure whether it will happen in 2021.
COVID-19 Hysteria
When I listen to other libertarians or conservatives who believe the coronavirus story is largely propaganda (hyped up by the media), I hear two main possible outcomes, assuming Trump leaves office.
The first outcome is that the lockdowns and restrictions continue, or even get worse, as long as enough people permit them to happen. The governors and mayors have newfound dictatorial powers, so why would they let them go? Politicians love power, and they gained tremendous power in 2020. They will continue to make the virus sound as bad as possible and keep people living in a state of fear. When people are fearful, they are easier to control.
The second outcome is that Biden gets into office and makes a few token moves. He’ll “ask” everyone to wear a mask for 100 days. If anything, this might lead to less mask wearing out of rebellion, but he’ll attribute any improvements to his policies and the vaccines. They can easily change the sensitivity of the PCR tests, thus driving the positive cases way down. After a few months in office, with the end of winter (which is typically the end of flu season), Biden can declare victory over the virus and we can start going back to a normal (pre March 2020) life.
Both arguments are plausible. They are both reasonable for a libertarian to make. I originally thought the second outcome would happen, but it has surprised me just how extensive the lockdowns have been. It is true that these politicians love their newly acquired power. At the same time, there are going to be fiscal budgetary problems with state and local governments. They will get some bailout money from the federal government, but at some point they will want to start collecting tax money again where it previously was. It would also look bad for Biden if everything just gets worse for the next several years.
My best prediction here is that it will be a combination of the two scenarios outlined above. I think Biden will issue a few orders to make it look like he’s doing something more than Trump. He will continue to tout the vaccines. Over time, the restrictions will be loosened. Some states will loosen quicker than others. But we aren’t going back to pre March 2020 any time soon. The mayors and governors will keep a hold of their power. They will generously allow 50% capacity at some establishments, or something like that. They will ease the burdens on small business owners, but they will not completely go away in many places.
I expect the mask hysteria to continue for a long time. It is a form of obedience. When someone wears a mask, it demonstrates that the person is an obedient citizen. They are listening to “the science” (i.e., the establishment media).
I wish I had better news here. I feel fortunate to live in Florida. If you live in California or New York, you should have already made your exit. People’s lives are being ruined. Many people are depressed. Kids are having their childhood robbed of them.
The Economy
I have been predicting a crash in stocks for too long now. The bubble has expanded bigger than I thought would happen. I already thought it was a bubble in late 2019. After massive lockdowns for much of 2020, with hundreds of thousands of small businesses closed and millions of newly unemployed people, stocks are booming.
Well, the big stocks are booming. This has caused the indexes to go wild. The heavily weighted stocks (think Amazon and Apple) have a major impact on the broad market. There’s no question that tech stocks have benefitted from the lockdowns, at least in the short run.
But the rise in stock prices is beyond ridiculous at this point. I expect a massive crash at some point, but we don’t know if it will happen in 2021. I expect it will, but you never know with the Federal Reserve right now. The Fed’s balance sheet grew by over $3 trillion in 2020. If the new money keeps flowing, then it could keep the stock bubble going for a while longer.
Going back to Harry Browne, it isn’t a question of whether stocks are about to crash any day now. It is a question of whether your portfolio is prepared in the event that they do crash. I know some people are going to get burned badly. I cringe when I hear people talking about putting a big chunk of money in Tesla, or even in an index fund. I also cringe when I hear people getting into Bitcoin for the first time. This is another major bubble.
It is best not to get swept up in the mania. If you want to gamble, you should set aside a small amount for speculation and use only that. I still recommend a permanent portfolio, or something similar in nature.
I think interest rates will stay low as long as price inflation expectations remain relatively low. I do believe we will see price inflation pick up at some point, but it is hard to say how much of it will be reflected in the CPI statistics. Right now, much of the new money created by the Fed is being used to bid up stock prices and housing prices in the suburbs.
Assuming Trump leaves office on January 20, 2021, he may look back later on and be thankful. I think the economy will be a mess over the next four years. I don’t expect a complete collapse, but there will be rough times ahead for tens of millions of Americans. There are already rough times now, and it will get worse for many.
The government continues to spend recklessly. It doesn’t matter who is president. It doesn’t matter which party controls Congress. The deficits keep going higher. The debt keeps going to new ridiculous levels. The consequences of this and the lockdowns have only begun. The next four years will be tough, and it won’t be fun for the president. We will likely see some kind of financial crisis and/ or massive price inflation scenario.
Control Your Own Destiny
Regardless of what happens this year, you can only control what you can control. You can predict everything right, but it won’t matter if you don’t prepare for it.
I do believe that one’s mentality plays a major role in dealing with crisis. While the events of 2020 were surprising to me, they didn’t catch me completely unprepared. Sure, I could have owned a bit more toilet paper back in March, but I was relatively calm in the face of it all. I saw through the propaganda from the beginning, which helped my state of mind. I saw so many people panicking and living in major fear. My main fear was the reaction of society. I wasn’t afraid of a virus though, so I didn’t have that hanging over me as so many others did. This was a great benefit.
While there are tough roads ahead, and we should fight for our liberty, it is especially important just to take care of yourself and your family. And the more freely that you can live your life, the more impact it will have for others. You can be an example for others on not being afraid and being mentally prepared for tough times.
Here’s to a better 2021 than 2020. I will remain optimistic and realistic at the same time.