A bunch of 2021 predictions here
From VC Fred Wilson as well as his reflections on 2020.
From Scott Galloway.
Some M&A and other predictions.
I sort of wanted to do a year end investment reflection post but like so many things it got put by the wayside in the end-of-year holidays, drinking too much wine and watching too much Netflix. But if 2020 has taught me anything, it’s that you should be easy on yourself.
Prediction is obviously a super difficult thing to do. The best are probably just slightly over 50% right, but being able to weight outcomes so that being wrong doesn’t hurt you too bad is what sorts out good traders from the rest. Even the greatest trades like shorting the housing bubble in 06-07 still had years of pain before being proved right.
Just cause it’s a new year doesn’t mean that trends and trades that worked change. In finance that was tech, then rotation to value out of growth, crypto, commodities, dollar weakness, lower rates for longer.
I think there’s a real shift in the policy debate now around government debts. What’s the appropriate Debt/GDP rate for the US? It was 120% in September. Even outside the modern monetary theorists it seems there’s growing consensus that it could run much higher, like c200%. What would that mean for stocks or other real assets?
It’s hard for me to look at SPACs or Tesla or any of the numerous bubbles out there and say they’re not crazy. But it’s a lot like 06-07 when Chuck Prince of Citigroup was saying “As long as the music is playing, you've got to get up and dance.” Except unlike 06-07 we had a huge recession and sell off already in markets. But we also had the upside all in 1 year, which makes trying to call what happens next incredibly difficult. If I had to guess I’d say that the potential to add a lot of leverage to the system, from governments and institutional investors will drive another round higher. M&A will pick up significantly, particularly in media, healthcare and retail.
So best of luck for 2021 and I hope you and your loved ones stay healthy and well. It’s tough to say by when will we go back to normal socialising/ travelling, or if we ever really will go back. My current inclination is that we’re more likely to see a roaring twenties type of return to social interaction, though the more meaningless and painful aspects of it like commuting and most business meetings will hopefully die away. At least we’ve gone from a scientific research problem of finding a cure to a logistics problem of vaccine distribution, one hopefully that we are much more equipped to solve.