Heads up, because I’m about to do something unwise and ill-advised. I’m about to step forward and proclaim that I make solid, reliable financial predictions.
I’m good at predicting and reporting financial trends! I put them in writing! I even make predictions with specific timelines and post them!
November 6, 2017. I published a post called “Crash is Coming.” In it, I wrote the following:
“It’s not like I’m foretelling the future when I say that the market is going to crash. I would be if I said I think it’s coming in first quarter of 2018. That would be a prediction. Making specific predictions is always a terrible idea because they’re virtually always wrong. Most people like to wait until after the fact to claim that they saw something coming. Putting it in print sets you up for failure.
In reality, I am planning for such an event.”
First Quarter isn’t over yet, and the outlook seemed to have improved at market open this morning, but I’m weighing in. On February 5, 2018, the Dow experienced the worst point drop in history. Not a “crash” technically, at least not yet. I don’t think we’re done yet, though. I’m bearish right now, which means I’m pessimistic about the near-term economic future. I’ll talk more about this after I pause to brag about my Bitcoin and cryptocurrency predictions.
January 22, 2018. I published a post called “We Passed on Bitcoin in 2013.” In it, I stated that I was skeptical about cryptocurrency for several reasons. Two of these were potential currency manipulation and the risk that crypto wallets could be hacked and robbed. I also said that the $14,100 valuation of BTC at the time of writing was probably a bubble.
Four days later, news broke about the biggest cryptocurrency hack of all time, in which $500 million worth of cryptocurrency had been stolen. Then, on February 5, news reports suggested that North Korea had allegedly stolen billions of dollars’ worth of Bitcoin. The value of BTC stands at just over 60% of what it was three weeks prior, when I wrote that it was a bubble.
I’m going to write more about the market and broader economic themes from now on. This is because they affect how we plan our personal finances and our life strategy. If financial independence is your aim, and if that aim includes a desire for freedom from stress and anxiety, then you need to be aware and informed of the world you live in. You also need to learn to form your own opinions and analyze trends based on how you believe they will affect you. If you’re skeptical about anything or everything I have to say, congratulations! That’s exactly what I want for you. Take that power of discernment and use it broadly, constantly.
Okay. Now for some more predictions.
I think we’re in for it. Over the next 2-3 years, a bunch of icky stuff is going to happen, and some of it has already started. The reason I think this is that we’ve seen these signs before.
Consumer savings are at their lowest in years
Real estate in many urban markets is stretched far past affordability for median-income households
Stock market is [was?] overdue for a correction
US Treasury is borrowing nearly a trillion dollars in 2018, increasing in 2019 and 2020
Novices are investing in financial vehicles they don’t understand
Unemployment is supposedly low, but I dunno if that means what they claim it means
For instance, we were riding in a Lyft recently on a Saturday night. The driver showed up in an immaculate, new car, which it turned out he was leasing by the week. He was engaging and intelligent, someone who would fit in well in our world of engineers and business professionals. We like to chat up our drivers, and this one grudgingly admitted that we were his 17th ride for the night. He’d made $60 and only three passengers had tipped him. I highly suspect that a lot of those high employment numbers reflect gig-economy “jobs” like this one. Also, those failures to tip represent something other than high consumer confidence.
Let me rewind and explain what I mean about novice investors. My hubby and I were sitting at a cafe table together, reading the news. I froze and got his attention so that I could read an article I found absolutely chilling. It was about single mums in Britain who were learning from their hair stylists or their middle-school children how to invest in Bitcoin. One said it was her only hope for eventual retirement. My hubby stared at me, his jaw hanging open. “Here it comes,” I said. We’ve been overhearing a lot of conversations lately in which obvious novices are discussing the stock market, real estate investment, startup funding, etc. Any seasoned investor will tell you that when you start hearing stock tips from your barber, watch out. Newbies buy high, freak out, and sell low. Enthusiastic novices become easily overwhelmed by BS and get sold on overvalued investments, “rental” properties with serious structural problems, junk bonds, and other detritus that more experienced investors will avoid. When a market is high in any sector, it can look like “easy money,” and that tends to turn heads.
Investing is a game in which a small segment of wealthy people with extraordinary math skills occasionally “win.” In this sense, “win” means that millions of people lose most or all that they have. It, ahem, trickles up. The average player truly isn’t playing the same game as they are, and not even on the same board. Wealthy people have access to funds and financial managers with a buy-in in the millions or hundreds of millions of dollars. We can’t get their rates of return because we can’t even make deposits in the same accounts that they can. We also can’t afford their lawyers, accountants, or financial planners. We’re on our own, and we have to use our wits.
There are three smart rules that I can give you, and they’ll work beautifully without further explanation.
If you earn 9% by speculating in the stock market, that’s fabulous. You can guarantee that rate of return by cutting what you spend on groceries, restaurants, booze, and coffee by 9%. You can guarantee 16% (or more) by paying off your credit cards. You can increase your employment income by anywhere from 20% to 200% fairly easily by learning more marketable skills and promoting yourself. Verbum sapienti sat.
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I've been working with chronic disorganization, squalor, and hoarding for over 20 years. I'm also a marathon runner who was diagnosed with fibromyalgia and thyroid disease 17 years ago.