What the Experts Think for 2018

Here’s my predictions for 2018…

Bitcoin to hit $500,000.

Australian interest rates to go up six times.

East Coast property to fall 25%.

West coast property to rise 25%.

The ASX to hit 7,500 points.

Trump to become US President — wait that already happened…

What do you think about the others though? Do you disagree with any of that? With all of it, perhaps?

Well, you might be right. These predictions do seem pretty outrageous. Far-fetched at the very least. But that’s not to say impossible.

They only seem impossible because they are so far away from where we are now.

Here’s the thing. That’s how your brain works. It’s a survival instinct.

Evolution is likely to come down hard on you if you act out wacky thoughts on a regular basis. The annual ‘Darwin awards’ for people who died doing silly things can attest to that.

And that’s why your brain automatically scans the world for a point of normality. A point to anchor future expectations around. That point becomes ‘normal’ for you.

The further away from ‘normal’ a prediction is, the less our brain is inclined to believe it.

That anchoring mechanism is then backed up by a second survival trait. The tendency to stay in the safety of the herd.

The result?

Social bonds cement an illusion of confidence in the future.

To go against the bounds of this ‘group think’ is to actively place yourself outside the herd. And to be ostracised in the process.

Whether that’s socially or professionally, either way it feels bad. The social repercussions are bad and you feel you must be wrong. That’s millions of years of evolution at work right there. Keeping you from thinking the unthinkable.

It generally doesn’t pay to stick your neck out. At least not publicly.

So, most aren’t brave enough to do it. There’s clearly safety in numbers. Just like there was on the African plains millions of years ago.

Now, why am I talking about this today? And what does it mean for your investments?

Why crazy predictions can be right

I think it’s a good time for a reminder that the future is unpredictable. A reminder that no one knows what will happen next. Good or bad.

I think that’s a great thought.

There’s no pre-destined outcome. You can make the future happen, so to speak.

And it’s also where the world’s greatest opportunities lie. Like right now. There are seismic shifts happening that the herd still doesn’t imagine possible.

Politically, economically, socially…

If you are a self-directed investor, you have taken on the responsibility of making sense of it all. This responsibility is a heavy one.

But it’s also liberating. As long as you remember what this means.

It means you’ve realised no one else knows any more than you necessarily do about what will happen next.

And in the world of investing that includes — no, that especially means expert opinion.

A strange thing for me to say? As someone that sells investment advice. I’ll admit we spend half our time trying to convince you that we do indeed know something.

But our greatest strength is not that we necessarily know something others don’t. It’s just the fact we know that the others don’t know it either.

That allows us to collect facts and to make ‘crazy’ predictions when that’s what our facts, experience and knowledge tell us is possible.

Mainstream economists, media channels, financial planners, fund managers and stock brokers all fall under the power of the herd mentality.

They rise and fall together as a herd.

They listen to the same presentations, go to the same conferences, read the same research notes. All under the guise of professional expertise.

And if they’re wrong, as long as they are wrong together, then that’s no problem for them either. Who else are you going to turn to?

Think the unthinkable

So, what do the experts think will happen in 2018?

Personally, I don’t care.

Here’s what they don’t think though…

They don’t think bitcoin will hit $1 million

They don’t think property prices in Australia can fall 50%.

They don’t think oil will go up to US$100.

They don’t think interest rates will go up rapidly.

They don’t think 3%+ inflation will return.

They don’t think the China boom can go on for another decade.

They don’t think resources stocks are any good right now.

They don’t think the central banks will become obsolete, stripped of their power to create and control money supply.

Yet I ask you, are any of these things possible?

I personally think they’re all possible.

Are they likely? Now that’s a different question. A question you have to ask yourself.

Are certain outcomes more likely to happen than people think? Are those bounds of what is considered ‘normal’ simply reinforced group thought?

That’s the right question to ask.

Take Trump’s election. Take Brexit. Take Bitcoin. All deemed impossible by the experts. All are now a reality.

That kind of thinking is how you make money consistently. It’s not about being right. It’s about knowing the true odds of being right versus the market opinion.

It’s about knowing the future is uncertain.

And then simply thinking.

Without anchors. Without experts.

It’s hard.

But it’s where the truly unique investment opportunities lie.

Ryan Dinse,
Editor, Money Morning

Ryan Dinse is an Editor at Money Morning.

He has worked in finance and investing for the past two decades as a financial planner, senior credit analyst, equity trader and fintech entrepreneur.

With an academic background in economics, he believes that the key to making good investments is investing appropriately at each stage of the economic cycle.

Different market conditions provide different opportunities. Ryan combines fundamental, technical and economic analysis with the goal of making sure you are in the right investments at the right time.

Ryan's premium publications include:

Money Morning Australia