The media have gotten noisy lately, haven’t they? I’m ignoring the latest economic predictions, and I urge you to do the same.
For us traders and investors, our desire to know the future is insatiable. We think that there has to be a golden key to unlock the door of knowledge, so we can see the future before it actually happens. We’ll listen to anyone, anywhere who may have an inside track.
Well my friends, I hate to disappoint you, but there is no key of that kind. Search all you want, but there is no crystal ball that can tell you the future. And this is why I ignore predictions. It’s a waste of time.
Why I’m ignoring the latest economic predictions
First of all, no one has lived through a pandemic like this. Regardless of that fact, some of the biggest names on Wall Street are trying to tell us how the current situation is going to end. How can they? This economic downturn is nothing like the Great Depression or Global Financial Crisis. (As a little reminder, here’s what people were saying back in March.)
Second, the current monetary policy and fiscal stimulus are unprecedented, so much so that some of the sharpest economic minds have predicted a coming doomsday. Really? Imagine what their predictions would be if there were no stimulus!
Third, the predictions are all over the place. One talking head says the dollar is going to crash. Another says China is going to become the economic leader of the world. (Remember when Japan was predicted to take over the world in the 1990’s?) Another says inflation is going to run rampant and crush the economy. We’ve heard it all before.
Here’s the thing: The economic recovery will play out, and it won’t look like any recovery before it. Though I like to say that we can learn from the past, our current situation is unlike any economic downturn that has come before it.
These economic predictions are worth nothing more than the paper they are written on. Anyone who is given a microphone or platform will shout their views from the mountain top in the hopes that things go their way. In the meantime, we have to listen and decide whether the advice is credible and worth acting on.
No matter who is preaching the latest economic gospel, take it with a grain of salt. React if you must, but be wary of the source. In the end, only you can take control of your own future.
And by the way, some green shoots are showing us a bit growth (12Shopify). Look around, you’ll see them. It may not be all that exciting, but you have to start somewhere.