2018 Predictions – Wealth

“The Mexicans predicted that the world was going to end in 2012.” – It’s Always Sunny In Philadelphia

DSC04429 So, of these things?  Deflationary Depression, $1,000,000 bills?  Nope.  It’s more likely that Hillary will hug Trump.

I know it’s not the New Year quite yet, but I thought I’d beat all of the big magazines to my predictions for 2018.  Then we can make fun of them and laugh marvel at my stunning accuracy next December . . .

Bitcoin

Well, Bitcoin is all the rage, again.

I suppose I should make a prediction about Bitcoin, and I will, but I’ll hedge my prediction with the thought that it is so very different than what anyone has seen that it doesn’t follow any previous models of currency or other financial instruments.  You can read my post about it here (LINK)

After even more research, my most likely conclusion is that the National Security Agency/Central Intelligence Agency is behind the creation of Bitcoin, but I’m not sure they knew how big it could become.  Risks to Bitcoin are significant:

Vulnerability to Hacking

The algorithm that’s used to verify that a Bitcoin exists is SHA-256, the (SHA) Secure Hashing Algorithm created by the National Security Agency.  Should the NSA have a way to subvert that algorithm, they would control all of Bitcoin, at will.  But, they also had the ability to read these words in real-time as I was typing this post, so they could just go and collect everyone’s passwords and private keys off of their hard drives if they wanted to.

I say the NSA could control Bitcoin, because I’m fairly sure that no other group on the planet could pull it off.  The Boy says that the algorithm used by Bitcoin is published and lots of people have reviewed it and think it’s sound.  But the NSA is very, very, very smart.

A risk that could drive Bitcoin to zero – in a day?  Sure.  But very low probability.

Nobody Takes Bitcoin    

You can’t go to Wal-Mart and buy RCs and Moon Pies with it.  The number of places that accept Bitcoin are very small.  The number of people using Bitcoin as money are likewise small.  If truth be known, you couldn’t take gold or silver into Wal-Mart to buy a Moon Pie, either.  But to be accepted as money rather than as a pure investment vehicle, it would need greater acceptance.

Volatility

Bitcoin price has been up and down more than a teenage girl’s mood.  And that would just be today.  In the last week it has dropped from $19,000 down to $13,900.  That’s a 27% drop.  In one week.

2018 Prediction on Bitcoin:

I predicted it would pull back, and it has.  I think it might have more to fall before it becomes stabilized, maybe to $10,000.  But I predict it would be higher than $20,000 next December.

The Stock Market

Hillary Clinton might not like Trump, but the stock market loves him, since the market is up over 24% since he was elected.  24% is huge. But it did 34% in 1995.  30% in 1997.  26% in 1998.  So, just like Monica, the stock market loved Bill Clinton once upon a time, too.  And none of those years had significant pullbacks immediately following.  Risky?  Sure.  But the trajectory is still up.  I think (if you look at the charts) this is the restart from a business pullback in 2015 and 2016.  As I travel around the country, there is massive business activity.  Things really are going well.

The biggest risks are North Korea, Iran, and Saudi Arabia, with anything that created higher oil prices being the biggest risk.  Chances of impeachment this year?  Nearly zero.

2018 Prediction on the S&P 500:

Up.  Not 24%.  But up, say, 10%.  2019?  We’ll see.

Interest Rates:

We’re recovering from the longest period of low interest rates in history.  All of history.  It really won’t make a difference, but the Federal Reserve simply must increase rates so that we can pretend that the money isn’t all made up.  Eventually if there’s a credible alternative (Bitcoin?) the Federal Reserve will have to raise interest rates . . . a lot.

2018 Prediction on the Federal Reserve Rate:

Up slightly.  Eventually (2019, 2020?) up a lot.

Gold/Silver:

Meh.  Wanders back and forth.  Probably ends the year +/-10% of where it started.  2019 or 2020 might be different stories, and longer term it will still experience huge upward swings during times of uncertainty.  It appears we’re currently at the “no crisis” pricing, which would probably be a good time to stock up.  The Boy accumulated several ounces of silver at $10-$20 and sold at $40.

So, there they are.  I’ll revisit these each quarter so you can laugh at me . . .

Disclaimer:  I haven’t started any positions in anything above the last three days (it was Christmas, you dolt) and don’t expect to start any in the next three.  So there.  Also, I’m not a financial advisor, and this set of “predictions” is probably as good as a Ouija® Board and probably worse than flipping a coin.

Author: John

Nobel-Prize Winning, MacArthur Genius Grant Near Recipient writing to you regularly about Fitness, Wealth, and Wisdom – How to be happy and how to be healthy. Oh, and rich.

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