By Shawn Langlois, MarketWatch
Donald Trump winning the presidential election in November 2016 and the ensuing “Trump bump” in the market set the stage for one shocker after another in 2017: a historic lack of volatility, resurgence of the FAANGs, a rally in Mexico stocks, and, of course, the mother of all eye-poppers — bitcoin’s surge.
In MarketWatch’s “Need to Know” column, we highlight a daily selection of the more notable market predictions from the Wall Street professionals on down to the armchair investors. (<INTERNAL-PAGE URL="/user/newsletter">Sign up to get Need to Know delivered to your email box here.</INTERNAL-PAGE> Be sure to check the Need to Know item.)
Some absolutely nail it, while others whiff badly.
Time for taking ownership. Let’s take a look at a few of the hits, misses and TBDs we covered over the course of an unpredictable 2017.
Ron Paul’s bear call
Accuracy rating: 1/10
Maybe Ron Paul should stick with... well, something other than market predictions. The multiple campaigner for president made headlines this summer with his forecast that stocks, plagued by an overrated recovery for the U.S. economy, could plunge 25% by October. He even upped his call by late August for a 50% pullback.
“If the market crashes tomorrow and we have a great depression, [Trump] didn’t do it in six months,” Paul said at the time. “It took more like six or 10 years to cause all these problems.” With the year winding down, this was clearly one shocker of a bad call from Paul, considering the Dow’s /zigman2/quotes/210598065/realtime DJIA +1.00% push above 24,000.
FAANGs are just playing dead
Accuracy rating: 9/10
Barron’s wrote a story midyear about how Netflix /zigman2/quotes/202353025/composite NFLX +5.54% , Apple /zigman2/quotes/202934861/composite AAPL +1.41% , Google /zigman2/quotes/202490156/composite GOOGL +0.92% and the rest of the FAANG bunch were merely playing dead and that a nice recovery was right around the corner. At the time, these market drivers had just taken a big hit after leading the Nasdaq Composite /zigman2/quotes/210598365/realtime COMP +2.19% to record highs earlier in the month. The sudden decline had many screaming “the bubble’s finally popping!” But not Barron’s. The pause was, indeed, temporary, and the group quickly went back to its winning ways and pushing the broader market to new heights.
“We might not like that these companies have gotten so big and so dominant, but they are reaching global audiences in ways that we’ve never seen any company do,” Dan Chung, CEO of asset manager Alger, told Barron’s.
The VIX at 1,000?
Accuracy rating: 1/10
This one may eventually turn out right, but wow, it couldn’t be more wrong so far, considering how incredibly quiet markets have been. Early in the year, the EconMatters blog said the VIX /zigman2/quotes/210598281/delayed VIX -6.22% , known as Wall Street’s “fear gauge,” could potentially topple the 1,000-point level. “The central banks have no clue to what degree they have distorted financial asset prices,” the blogger wrote. “We are facing the massive unilateral complete global financial default that only the tin foil hat crowd has envisioned.” This was a bold call, no doubt, considering the index has never even topped 100. The VIX is actually LOWER than when this call came out. So... not even a passing grade on this one. Yet.
Accuracy rating: 7/10
We first mentioned John McAfee’s love for bitcoin /zigman2/quotes/31322028/realtime BTCUSD +1.23% back when the crypto was closing in on $3,000. At the time, the cybersecurity legend said bitcoin was showing some enormous momentum and had plenty of upside. Then, in July, he took it up several notches and said bitcoin would hit $500,000 within three years or he’d eat a NSFW piece of himself. McAfee upped the ante a few months later, and even after a volatile Christmas weekend for bitcoin, he double-downed on the $1 million by 2020 call . It’s hard to give him too much credit for these calls, and they still seem pretty outlandish. But his original call from back in May -- “Bitcoin has enormous momentum” -- certainly hit the mark.