December 2017 investment ideas revisited....
Discussion
This time last year I started a forward looking thread in which I tried to set out my thoughts on markets/investment ideas for 2018. I said I would revisit in a years time, as it is always a good discipline to set out and then review your investment thinking.
1. UK Equities will disappoint as Brexit uncertainties persist [FTSE All Share @3900, FTSE100 @6900]
>>The All-Share has fallen by 10%, from 4100 to 3700. The FTSE100 by a similar % from 7400 to 6700. I think that's a pretty good prediction.
2. GBP, against the odds, may actually strengthen [GBPUSD @1.40, EURGBP @0.82]
>>GBPUSD has fallen from 1.34 to 1.27. A poor prediction!
3. Euro Eq will outperform other developed makets driven by gentle earnings growth and PE expansion [Eurostoxx 600 @425]
>>The Eurostoxx 600 has fallen from 388 to 342, against the rise I forecast! Another one for the bin...
4. US Eq (where too much earnings growth has been priced in) will see a correction in H1, but it won't be a disaster [S&P500 @2600 having touched 2200]
>>Index is essentially unchanged at 2600. A good call on both the year-end index level, and on the H1 correction, -12% drawdown in Q1.
5. There'll be better opportunities to buy credit across the spectrum than there are today
>>US10Yr has been over 3%, so a good prediction even if a little ground has been lost in the last month or so.
6. Compulsive sellers of US vol will experience lasting pain as their fingers are finally caught by the heavy roller [realised vol +50% yoy]
>>I've shown a 2 year chart here, to highlight how stable/depressed VIX was until - well - until it wasn't. This one blew the doors off at the beginning of Feb. A good prediction.
7. Tech will underperform with some high-profile re-ratings in the US [Nasdaq @6000]
>>Well the re-ratings have certainly happened (or are happening...) so that was a decent call. But the full year prediction was mistaken as the index shows a small gain.
8. Expensive "bond proxy" valuations will be undermined by US rate rises and the emergence of substitute holdings
>>This prediction went exceptionally well for a month or two, but reversed itself thereafter with a Black Knight level refusal to die. Ultimately a poor prediction.
9. Tesla and BTC shorts (albeit only those with the cojones to hang on through significant pain) will have their day [TSLA <200, BTCUSD<8000]
>>TSLA shorts certainly had their chances, but it is SO volatile and hard to trade even with kevlar gloves. Call that one a draw.
>>BTC has headed pretty much directly toward fair value. I would like to point out just how contrarian a call this was in December 2017...!
10. Cash will prove to be the most over-sold asset class as 2017 becomes 2018
>>Correct - I wish I'd held more. Again....
So, on balance I am pretty pleased. There are some disappointments - notably Euro Equities and GBPUSD, but also some solid calls (UK Indices, Bonds) and a couple of profitably tradable ideas - notably VIX and BTC.
At some point in the next week or two I will have another go at this with 2019 in mind...
WindyCommon 16th December 2017 said:
I thought it might be interesting to have a thread in which we can compare investment ideas going into 2018. We can then look back on it through the year so as to manage the contribution from the several Hindsight Capital employees who seem to frequent this part of the forum ;>
I guess I should go first....
So, what happened...? In each case, the text by the numbers is from the original post, with my current comments following after >>I guess I should go first....
1. UK Equities will disappoint as Brexit uncertainties persist [FTSE All Share @3900, FTSE100 @6900]
>>The All-Share has fallen by 10%, from 4100 to 3700. The FTSE100 by a similar % from 7400 to 6700. I think that's a pretty good prediction.
2. GBP, against the odds, may actually strengthen [GBPUSD @1.40, EURGBP @0.82]
>>GBPUSD has fallen from 1.34 to 1.27. A poor prediction!
3. Euro Eq will outperform other developed makets driven by gentle earnings growth and PE expansion [Eurostoxx 600 @425]
>>The Eurostoxx 600 has fallen from 388 to 342, against the rise I forecast! Another one for the bin...
4. US Eq (where too much earnings growth has been priced in) will see a correction in H1, but it won't be a disaster [S&P500 @2600 having touched 2200]
>>Index is essentially unchanged at 2600. A good call on both the year-end index level, and on the H1 correction, -12% drawdown in Q1.
5. There'll be better opportunities to buy credit across the spectrum than there are today
>>US10Yr has been over 3%, so a good prediction even if a little ground has been lost in the last month or so.
6. Compulsive sellers of US vol will experience lasting pain as their fingers are finally caught by the heavy roller [realised vol +50% yoy]
>>I've shown a 2 year chart here, to highlight how stable/depressed VIX was until - well - until it wasn't. This one blew the doors off at the beginning of Feb. A good prediction.
7. Tech will underperform with some high-profile re-ratings in the US [Nasdaq @6000]
>>Well the re-ratings have certainly happened (or are happening...) so that was a decent call. But the full year prediction was mistaken as the index shows a small gain.
8. Expensive "bond proxy" valuations will be undermined by US rate rises and the emergence of substitute holdings
>>This prediction went exceptionally well for a month or two, but reversed itself thereafter with a Black Knight level refusal to die. Ultimately a poor prediction.
9. Tesla and BTC shorts (albeit only those with the cojones to hang on through significant pain) will have their day [TSLA <200, BTCUSD<8000]
>>TSLA shorts certainly had their chances, but it is SO volatile and hard to trade even with kevlar gloves. Call that one a draw.
>>BTC has headed pretty much directly toward fair value. I would like to point out just how contrarian a call this was in December 2017...!
10. Cash will prove to be the most over-sold asset class as 2017 becomes 2018
>>Correct - I wish I'd held more. Again....
So, on balance I am pretty pleased. There are some disappointments - notably Euro Equities and GBPUSD, but also some solid calls (UK Indices, Bonds) and a couple of profitably tradable ideas - notably VIX and BTC.
At some point in the next week or two I will have another go at this with 2019 in mind...
Good to see such open analysis of your predictions from last year.
Some good (and one very contrarian) calls, coupled with a fair share of wrong ones!
It is always refreshing to see someone making investment decisions based upon informed and reasoned future projections, a rare thing with most investors, and then laying bare the results.
Out of interest, what was the total return for the whole portfolio over this period?
Some good (and one very contrarian) calls, coupled with a fair share of wrong ones!
It is always refreshing to see someone making investment decisions based upon informed and reasoned future projections, a rare thing with most investors, and then laying bare the results.
Out of interest, what was the total return for the whole portfolio over this period?
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