TheIntelligentMacroAnalyst Post #1 The macro framework I have been following since March 2019/2020 - a review of past and future predictions

If this is the first piece of mine you have opened, please refer back to my purpose of the blog page to inform yourself about the purpose of this series from here. Please read this section carefully and if you don't at least read the part the middle of the page titled "What does this blog include?". Without reading the PURPOSE OF THE BLOG, there is a chance you misunderstand what 1) this series - The IntelligentMacroAnalyst and 2) this blog are about.

In this first piece, I will not look into a specific PESTLE factor (PESTLE refers the Political, Economic, Social, Technological, Legal and Environmental external environment factors that affect every industry and every firm in the world, see Figure 1., below), but I will look into a set of predictions I made in 2020 about how a second economic crash will come in 2021-2022 (after the 2020 COVID-19) and it will worsen the quality of our lives. My key thesis was that we would have a global crisis and that will cause the external environment itself to change and have a negative impact on everyone - firms, governments, political leaders, strategic groups, industries and especially individuals like you and I.

Figure 1. PESTLE Factors.

In 2020, I wrote what I called an e-book. The main purpose of this book was to outline that COVID-19 was one of the two crises I envisioned for us post 2019 and that unfortunately I see a second one to come in 2021-2022. In this piece I will cover 1) about 5 quotes to show how I saw things in Q1 2020 and 2) the evidence that supports/rejects my first five 2020 predictions in Q1 2023 (spoiler alert, none are rejected).

Some interesting quotes in retrospect from the first paragraphs of my book are:

1) "People should have already started to realize that in the past (prior 1970s), a financial crisis in the US did not necessarily mean a global financial meltdown. However, in today's globalized world, a meltdown in a few large countries (i.e. the G13 countries) could be large enough to bring about a financial disaster which could be worse for the average person than the crisis of 2007-2008."

-The emphasis here is that I explicitly stated that a crisis in one or a few countries today, would affect the average person quite a lot; I also wrote it can be worse for us people than the 2007-2008 crisis.

2) "This deflation/disinflation could eventually lead many of the G13 countries' governments' to take measures that could lead to (asset/commodify price) inflation, which could be devastating for all of us - the individuals who work hard to make this economy work."

-This refers to the situation as it was back in 2019-2020 - deflation, and hypothesized that deflation will turn into inflation by end of 2021 and cause us to experience inflation in everything we buy in our life (yes I wrote this in Q1 2019 and Q1 2020). For instance, in the Netherlands natural gas and electricity are up 570%, coffee price is up about 80-100%, food price is up, vegetable oil increased by 300% (these are all examples of commodity inflation). Asset inflation is the only one that is positive, if we own assets that is (which is barely getting started, i.e. inflation causes asset prices to go up in the long-term as companies raise their prices to offset cost and pass it onto to us, the consumers, making our lives even more difficult (but companies and their stocks remain profitable).

3) "Going back today, the disinflation crisis of 2020-2021 could mean that new quantitate easing programs (QEs) are used by G13 countries to create reflation (i.e. to provide liquidity to the financial system) in order to mitigate its impact on businesses and increase inflation levels".

-Here, I pointed out exactly what will cause us to lose purchasing power and will kick-start the 2021-2022 crisis I expected - i.e. "reflation" or the increase of money supply (via Quantitative Easing programs, does $4-5 trillion COVID-19 package + energy subsidies ring any bells?). Do you now understand what "reflation" is, having experienced it? In short, it's adding money that does not exist to the economy and since money itself becomes more in quantity, all prices adjust to the new supply/amount of money, and if money itself increases in quantity, then the price of each good/service will increase in price (to adjust for the new money supply).

4) When reflation happens, people who do not own any investments start losing purchasing power as this causes price inflation (of the services and products we use) to increase, making it more expensive for us to buy them. For investments, however, price inflation means they go up with a comparable level and maintain purchasing power. My purpose is to provide you with a perspective on what I would do to mitigate financial losses and to emerge victorious from the coming meltdown. While, it is unlikely that the US or Europe "becomes Venezuela" and have hyperinflation, simple inflation of 50% over 10 years could mean that people lose about 50% of their purchasing power in a decade.

- The key thesis of this was that no one expects that we can lose up to 50% of our purchasing power from 2021 to 2031, especially in the Western countries but I do. I also pointed out the specific moment we will start experiencing the inflation  as the result of the reflation process which creates inflation by increasing the supply of money. The good news and the bad news of as of here. 

-The good news is that while the stock market had its two crises, my expectation is that from here it will be up (to adjust stock market returns to the inflation we have already experienced). In other words, commodity inflation has taken place, but asset prices have not adjusted to new highs (which suggests at least 100-300% gain from the bottom of 2023).

In short, people who were down during the 2021-2022 crisis, can expect positive returns. 

-The bad news remains that people with no investments will lose their purchasing power forever. The other important point here was that I explained that inflation crises have longer-term impact. In other words, to have fully benefited from growth of markets after the crisis, we will need to invest for at least 7-10 years. In other words, today is like 2009 and we may just be beginning to have the best 10 years. When I wrote in 2021 that we will have a crisis people wanted to kill me with rocks. Now, when I write this, I imagine people will scream have you seen the news. Yes, and because you (not you specifically but you as one of those people who in 2021 expected all the good things to continue) are finally bearish, I am finally bullish (because I expected bad things in Q1 2019 for Q1 2020 and bad things post Q1 2021 to Q4 2022/Q1 2023). Neither Dr Burry, nor Buffet, nor any professional firm wrote about this, it was just me. I do not imply I am smarter than all of them, I just want to point out this was the first and only place which from 2020 accurately described what will happen in 2021-2022. 

5) Lastly, I provide you with some idea on how I plan to avoid losing about 50-100% of my own purchasing power over the next 5-10 years.

-Here I point to the idea that I do not see a way out from the crisis for at least 2-3 years as of 2020, this meant that as of 2020 I had to take at least a 5 year view, which would include 2-3 years for the crisis to unfold and another 2-3 for the market to perform. It also meant that I was open to the idea that even if a more prolonged crisis takes place, that I still have a plan based on this understanding that there will be a crisis. As outlined in my book, I did not expect markets to be up until certain other predictions came true and 2021-2022 had passed (leaving us with 3 bitter years 2020, 2021 and 2022) and setting us up for the next 3-6-10 good years. In my e-book I described that in investing theory risk is always equal to return, and that the COVID-19 rally (which hadn't happened yet) will lead to such growth that the perceived risk levels by mid 2021 will become so low that something horrific would need to happen for us by Q3-Q4 2021 and last for at least the half or the whole 2022. I explained for returns to be positive, we would need to have risk increase again which usually comes via a global crisis caused by one thing or another. I'd say the Russia/Ukraine war + inflation did it. Now that there is once again risk in the world, there can be return. These 3 years of pain are likely to bring market participants at least 3-6 years of joy and in a more optimistic case, up to 9-10 years of positive market returns before (2020-2022 repeats itself, in a different way in the future, that is also a prediction in my e-book since 2020).

My favourite quote of a different book called "Think Again" by Adam Grant is: 

"The best predictors of the future aren't smarter, they are just willing to take one more look, one more time than the other folks."

So even though these accurate predictions about how the world will fall of a cliff and we will be crushed by inflation and a crisis are correct, this is not because I am smarter, it's because I dedicate every day of my life to take "one more look, one more time".

List of predictions I made in 2020 (part 1, see Figure 2 below). In this piece, I will cover only these (to 2025/6) and I will cover the others in different pieces.

Figure 2. Part1, Predictions from 2019/2020 e-book

Predictions outcomes summary:

Predictions 1A, 1B, 2A, 2B, and 3A are 100% accepted.

Predictions 3B, 4B, 5B and 5C - still forward looking as they refer to 2025-2030 (so these are the relevant ongoing predications I have since Q1,2020). Given they are still on-going, these are the most important now as they are predictions about the 2023 to 2025/2026 and 2030 periods.

Prediction 5A is partially accepted as we are in 2023 and gold miners (AUY and EGO) are outperforming both S&P and NASDAQ, but we do not know about 2025 yet. 

Below I look into each of these predictions I made in Q1 2020 and the evidence by Q1 2023 (three years later) to examine how they are holding up in reality.

Actual Predictions and their developments:

Prediction 1A: The next financial meltdown will occur by 2021-2022 in financial markets. Well, this prediction is 100% accurate. The simplest way to show it is that the traditional 60/40 portfolio had it's worst year in the last over 100 years (see Figure 3, below).

Figure 3. 60/40 in 2022 

I cannot help myself but smile about this because for the last 5 years I have been explaining that 60/40 will fail in the next crisis. Making a prediction about something that hasn't happened in 100 years, makes me feel happy to say in being able to make such an accurate prediction about something that hasn't happened for so long (i.e. never -20% since 1970s and never -30% since 1929), but I was able to see it as a person who was not even alive in 1970s and not to mention 1929 (...one more look, one more time).

I did not know what will cause the crisis but I knew that it will be obvious when it starts coming. In retrospect this is a combination of 1) COVID-19 Stimulus, increasing money supply by 8 trillion (this is Prediction 2B below) and 2) another global factor (which we now know was the Russia/Ukraine war).

Prediction 1B: The consequences for the average person will be felt the hardest by 2023-2025 (or  at least 1 year after the crash in the market). I look at some examples in NL and USA.

NL

Given that is barely March 2023, I cannot as of now conclude about the full 2023 or 2025. However, what I can say about NL is that as of Q1 2023 we had the highest increase in energy prices (by 570%). In 2022, my energy bill was barely 200%. Either my energy provider - Vatenfall is a scam, or indeed the implications are felt exactly about 1 year after the crisis caused by the invasion of Russia into Ukraine which created implications for the rest of the world. Also, as of now, I am experiencing the worst energy prices exactly in 2023 (as the prediction states).

The funny part is that while natural gas prices are -80% on spot markets, we are charged prices at the highs (that is to show an example of how companies transfer their losses due to inflation to become consumer losses which is why companies don't mind inflation). Our personal energy bills may ease off in 2023, by the end of the year they might actually reach new highs which will put the worst for people in 2024-2025. This is still unclear, however, I do remain open to the prospect that the inflation cycle we experienced in 2021-2022 was only part 1. If natural gas prices were to skyrocket to new all time highs, we would definitely feel even more pain ahead (so the prediction is accepted but remains ongoing).

USA

One way to visualize this is by looking into Figure 4 below. This figure shows M1, which is the economic term for "the cash available in the US economy" when I wrote the e-book, the value of M1 was at about 4 billion. Since then, M1/cash has increased by 400%. Yes, this suggests that there is literally 400% more cash (new cash notes/bills) from 2020 levels, from $4 to $20 billion.

To understand the significance of this change, during 1960 to 2020 US money supply grew barely to $4 billion (in 60 years!!!). US has now increased this amount which has grown steadily over 60 years by 400% in 1 year (not 80, not 100, but 1)!!! This means that about 2/3 of ALL DOLLARS in circulation were created in 2020. This suggests, our lifestyle in the next 10y will worsen by factor of 2-4 unless we do something about it (by 2023, it has at least worsened by a 100-200%). It is also a way to show, why the worst may not be behind us as individuals (i.e. as companies continue to adjust their prices due to the inflation created by this, we as individuals will continue to suffer, literally paying the price for this).

Figure 4. Cash, defined by M1 in US, increasing from $4 to $20 billion

When I listen to the FED speeches that inflation came from the war of Russia, I find this entertaining because the evidence will point to another reason for the major inflation. Just fyi, historically there has been a "war tax", meaning people paid tax in times of war to avoid inflation. Did we pay a war tax? I do not think so. There is a quote I love, inflation is always a monetary policy phenomenon. Or to visualize this in another way, see Figure 5 below:

Figure 5. Inflation's main cause

Oh one more thing, I live in the Netherlands, so why the hell am I discussing the dollar and the US money supply? Well, not the least because when US suffers, the world suffers more. At the height of this crisis 1 EUR used to buy $0.95 as opposed to $1.20 per 1 EUR in 2020 (i.e. as Europeans we temporary lost over 25% purchasing power vs the dollar while the US and Europe were having energy shortages and other problems dealing with the inflation). So I personally analyse the world, by starting from US as the country which has the reserve currency. If the analysis shows that US will suffer, we suffer more (which is kind of ironic, but part of the rules of physics of markets).

I will reflect on this in the future. The key implication here is 1) the crisis in markets may be over, but 2) the crisis in our personal lives, may have been just part 1 of 2. The US has increased M1 for 1 year, by 400% more than for 60 years, this does not look fully priced in (as on average prices will need to increase 200-400% by 2030 from 2020 to adjust for this, it may be 200%, because improvements in productivity will offset at least part of this). The only way to assume this is over is to say we already had 200% inflation, which to some extent we did, but not on all products (as a whole). Below I will explain that in the US this number is about 55%, i.e. a lot of room to 200%, on average by 2030.

Prediction 2A: PPI is the producer price index, this means, the average cost of all producers of all goods at the factory level. PPI is measure of inflation on the factory level and is thus considered a leading indicator of future CPI (the inflation for us people). So simply put, PPI is the inflation that companies face (and how much their raw materials and costs of operations increased) which indicates that they are likely to increase prices by at least the level of PPI, while CPI is in theory the inflation that people face (as a direct consequence of PPI increases). 

The problem with CPI as a measure of inflation, is that CPI has changed from a constant to a variable (i.e. things can be included, excluded and replaced). So this means what we consider inflation changes as CPI's definition changes over the years (unlike PPIs). The most recent CPI change was in 2021 to exclude housing and electricity costs from it (as if rent and electricity costs do not make up 2/3 of my monthly expenses). In short, to avoid CPI being too high, they just remove the items which increased in price the most (which is ironic to say the least). As a researcher, I truly admire someone who believes that shelter and electricity are not important items to be in CPI, given that they represent north of 30-50% of every household's expenses. The implications to me are to never look at CPI/Inflation, but only at PPI.

In simple words PPI is the prices companies pay to produce products and the change in if it increases it means that companies have had inflation. If prices for companies have increased, they increase their products' and services' prices for us as consumers, which eventually makes all products we buy more expensive. 

In 2019 when I wrote severe deflation (this was illustrated by Figure 6 below, see the decrease of PPI from 205 to about 185, shown by the range of 2019-2020 as the blue line indicates a decrease and a bottom around April 2020, when I posted my book). In other words, to me this was indicating we have had deflation from 2017 to 2020 (actually from 2012 to 2020), which will end. I think I nailed it a 100%. As we can see in the same Figure 6, from the time I posted my e-book, PPI increased from 185 in April 2020 to 280 by July 2022. This means the average inflation that producers in the US faced is 90%! If you tell me that the CPI is 8%, I will believe you. After all, in capitalism, the way things work is that companies which have 100% inflation on the production level, are likely to increase prices by 200% to remain competitive (if that somehow averages to 8%-20% CPI, I will smile). 

As I explained, in NL electricity and gas is about 6X up. In theory my inflation is 18%. That makes sense if you exclude electricity but electricity is now almost as much as my rent, when it was 10% of my rent. In other words, if we exclude the most important costs which have grown 600%, sure out personal inflation is 20%. But, how the electricity company feel if I don't pay my electricity bill which increased by 600%? Ah yes, they would fine me. In other words, while CPI can exclude housing and energy costs, we cannot avoid these (and exclude them from our lives). So you can see why I have troubles with 8% CPI for US and 18% Inflation in NL (as the real inflation numbers which I see in PPI suggest that inflation is north of 50% for both countries).

Figure 6: Producer price index - inflation for companies

I hope this shows why I say, the worst may be yet to come. Because if PPI is 50-100%, we face double this PPI over a 5-10y period (as companies increase prices by PPI or PPI +100% to be sure they do not lose earnings and remain profitable). For now, we have had some significant increases, but unless PPI drops back to at least 200-220, our lives will continue to worsen as prices we pay will continue to increase. Any deflationary shock from here, might be a short-term correction on a further part of pain regarding the buying prices of our favourite products (for deflation to have really returned, and for prices to stop increasing, PPI would not only need to drop back to about 200, but stay there for years). 

Prediction 2B: The prediction was that FED will increase the assets on its balance sheet by $3.5-$7 TRILLION to 2030. Now we are barely in 2023, and we have already had about a $5 trillion increase as of Q1 2019 (where I had my draft) and about a $4 trillion as of 2020 (where I posted the e-book). Isn't it nice when math works out beautifully?

If you scroll down below to my "final note". You will see that I wrote my first draft of this book in March 2019 where I wanted to explain the pre-conditions for two crises. However, by the time I finished in same time 2020, one had already happened. However, the key take-away is when I wrote this FED balance sheet was less than $4 trillion. Now it's high is about $9 trillion (see Figure 7, below). And all the pain felt in markets was dropping this by about $0.7 trillion from 2022 to now (fun fact, $0.7 trillion was the entire package for the 2008 housing collapse, which was the largest package at the time). So this is the amount by which FED balance has shrunk is less than a 0.08%.

Figure 7. FED balance sheet which I predicted will grow by 3.5-7 trillion by 2030, grown by 3.5 trillion by 2022

We can sum up the increase in M1 to actually look like this and FED total balance sheet to continue to grow in the coming years.

Prediction 3A: Interest rates will increase to at least 2,5-3%, businesses will go bankrupt and pain will last at least 2 years as of 2020 (to 2022). 

Because interest rates are said to be impossible to predict, I will not say what I wrote, I will just paste it and let you re-read only small parts so you can tell me whether interest rates are unpredictable as they seem?

Figure 8. Prediction on interest rates from e-book 2020

This is the exact quote. The one thing that may seem inconsistent is the "this is not an inflationary crisis". What I explain further is this not the type of 1970s inflation crisis which was due to people returning from war who suddenly needed jobs and products, which caused a spike in demand. In 2020, this was via "reflation" which "caused inflation" via increasing money supply. So I meant that this is not the type of demand-driven, but reflation driven crisis which will not have the same inflation as 1980s but about half. Now that this is clarified, back to interest rates.

The point I was making is that interest rates were already at 2.5% when I wrote this piece in 2019. I simply projected they would drop to 0 and then go up above 2.5-3% rapidly to offset the inflation created by the 2020 reflation. What I did not copy here is that I also wrote that 3.5% could just be the start and we could see up to 5-6%. We are currently sitting at about 4.5%

I also went further and wrote a specific 2021-2022 interest rates prediction (see Figure 9, below) and how interest raises being raised will cause 1) stock market outflows, 2) stock market collapse of 25-35% on different indexes and 3) bankruptcies of businesses.

Figure 9. Specific 2021-2022 predictions and Actual 2022 interest rates

As can be seen, someone did predict that by end of 2022, interest rates will be 3% and it was very logical. Someone did also explain that these interest rate increases will cause stocks and by extension crypto markets to drop significantly in Q3-Q4 2021 to at least Q3 2022.

Also, on bankruptcies I will summarize that they have been as high as 2010 (and lower than 2009, for now), as shown by Figure 10 below.

Figure 10. US businesses highest bankruptcies since 2010

Lastly, we did feel pain in both personal life and markets for at least 2 years after April 2020 to April 2022, and we are still experiencing it (which refers back to prediction 2A (above) that the worst for us people may be yet to come).

In short, all 3 sub-predictions on this prediction 100% accepted.

Prediction 3B: The key prediction here is once the interest rates reach 5-7%, the cycle will end and will reverse from increasing interest rates to lowering them (just like 2012-2020, which will of course give rise to the pre-conditions of the 2030-2035 crisis). As of now, I cannot discuss anything about this yet because we are barely in 2023, and interest rates are still increasing. As of now it seems very logical that by 2025-2026 interest rates will start being lowered again. One small piece of evidence about this is that interest rates have not risen as sharp as they have in 2021-2022 ever. In other words, even during the double inflation crisis of 1970s and 1980s, interest rates climbed to a larger total percentage but at a much slower pace (despite inflation in the 1970s being double what it was now for US specifically), and the pace of the increases is what actually matters. So, I think of interest rates as the barometer to the health of the economy, when they go to 0, odds become that in the next 6-12 months, we experience a downturn (so this is how I will recognize the potential 2030-2035 crisis, it will have the same pre-condition, rates will be near 0). Sharp movements in either directions are what causes markets to drop.

Prediction 4A: Funds like Vanguards' VTI will fall by at least 25-35%. I chose VTI maybe you have not heard about it, but it has over $1 trillion dollars invested in it and it represents 1/40 of the world's total GDP. See actual decline from May 2022 to Nov 2022 in Figure 11.

Figure 11. VTI, the -25% drawdown

Even without taking the absolute high and low, I can show that Vanguard's fund indeed dropped in 2022 from $240 to $179.30 per share. This is exactly a 25.4% drop on the index from high to low (100% accepted prediction).

Despite this being shown above as -9% (below the 200.31 price), this is because I am looking the price for the last 1 year, which already includes the upside from $179.30 to $200.31 (yahoo limitations). In any case, from top to low it is (179.30-240)/240 = -25.4%

This is also 100% accepted as VTI is -25% to low, and NASDAQ was -33% (so not 35%), but is this significantly different?

Prediction 4B: The US indexes like NASDAQ and S&P and funds like VTI will recover to new highs by 2026-2030. 

This is the most relevant prediction of the e-book, which is now the most relevant prediction of this piece about the future. In other words, this is the prediction that says, once we have had these -25-35% for indexes (2021-2022), we will have a new bull market to at least 2025-2026. So this is the thesis that is yet to be tested. This is why I also have my individual pieces on what I own in this environment to plan for my future life goals such as buying a house and raising a child.

So yes, this is yet to be confirmed, but a beautiful place for you to join me on my journey and see the progress of this opinion by clicking here (I use SPY instead of VTI, but both are US broad market indexes and $SPY is probably better known and also larger). As we can see, as of October 2022, indexes have already started to recover, which is a positive sign to me, that my view would hold.

To visualize this, I will firstly use the 1980s high inflation parallel of the past.

Figure 12. If the 1980s is the correct parallel we will have reached previous highs by May 2023 

This also suggests new highs as early as by the end of 2023.

If I had a bearish view, it would be something like this - bearish at worst to the end of this year, and at new highs by end of 2024-2026.

Figure 13. Alternative not so bullish scenario, allowing double low

The one thing they have in common is that both suggest new highs. The first one suggests it may be as early as the end of this year (my personal opinion is that). However, even getting a double low to Dec 2023 and having new highs by April 2024, would be acceptable for me.

Prediction 5A:

The graph below is a bit ugly, but because I have cut it out as of Q1 2019, when I first made the prediction that gold miners (like AUY and EGO) will outperform S&P and NASDAQ. I couldn't put a bigger picture, but you can click on  Figure 14., below and you will see the results much better.

Figure 14. EGO +170.86%, AUY +163%, S&P +39.24%, NASDAQ +46.3%

The key thing that the graph shows is that as of March 2019, Eldorado Gold (EGO) is the leader, having produced over 179% return from Q1 2019 to Q1 2023, followed by Yamana Gold with 163.4%. Both are doing with 2x better than NASDAQ and 3x better than S&P. I remember specifically buying these two stocks when I heard the news about "the new highest skyscraper building being built in Saudi Arabia to dwarf the Burj Khalifa of Dubai (I will write a specific piece about why this is important and link it here). The key takeaway is once such an non-sense extravagant projects are announced this usually means a global crisis is to come soon because 1) interest rates have bottomed out i.e. are 0 or as close to 0 and 2) too much stupid money is out there, being leveraged (in 2006-2007 was Burj Khalifa itself was the nonsense project and its news warned people about the 2008 crisis 1 year in advance, just like in March 2019 "the Saudi's new building" warned us about COVID-19 which was in 1 year later by March 2020 (welcome to the Matrix). The Burj Khalifa was paused for 2-3 years, so it predicted its own crisis, kind of funny. Next time you are in Dubai ask them if the greatest building the world was announced exactly before the 2008 crisis and whether it was stopped being constructed to 2010-2011. On another funny note, it does not even have a sewage system (so the greatest building in the world would explode of shit if 100 trucks don't come to take the poop out of it). Such a wise investment indeed. But at least a great example for me to show you and teach you to remember (when the newest tallest building is announced, brace yourselves for IMPACT).

Back to the topic at hand, since March 2019, EGO is up about 170.86% from March to 2019 to March 2023 (at the high of 2021 it was over 350% up).Yamana gold is the second with 163.37% from 2019 to 2023. These are much higher than the about 46.3% for NASDAQ which at the top of 2011 was 100% (i.e. about 2x less than the 2 gold miners who were +300%). S&P, the worst with barely 39.24% from March 2019 to March 2023, and a top in 2021, i.e. it was only +50% from 2019-2021. for the 100% of Nasdaq and 350% of EGO. In short, as of Q1 2019, I had 30% of my portfolio in these gold miners for the first time reducing my portfolio from 100% growth oriented, to 70% growth and 30% defensive (and as my defence I chose AUY and EGO). I did not choose GOLD as physical gold, or a gold miners ETF, I chose stocks (these stocks have also outperformed gold itself).

Figure 15 below shows the same thing as of the April 2020 COVID-19 lows, or where I published my e-book and the hypothesis that AUY and EGO gold miners will outperform from 2019-2020 to 2025. By then I had already converted over 60% of my portfolio to these defensive stocks and added CCJ - Cameco (Uranium) and others to increase my defence, i.e. after the covid-19 lows, I continued to add gold miners in anticipation of another crisis 1-2 years away from 2020 in 2021-2022 (that was my book's base case).

Figure 15. EGO +64.87%, AUY 96.31%, S&P +48.95%, NASDAQ, +47.09%

As of Q1 2020, the COVID-19 crash, the same thing applies as from Q1 2019. However, the percentages are lower because as I showed above, the gold miners bottom was in 2019. Overall, since Q1 2020, the only change is that AUY is now the best performer with 96.3% from Q1 2020 to Q1 2023, followed by EGO with 65%. AUY is doing 100% better than both the S&P and NASDAQ which are up 48.95% and 47.09% for the same period. EGO is not 100% better, but it has outperformed both with about 15-20%, depending on the specific days. So, these both have outperformed the indexes.

The prediction holds for now (as it is not 2025), and for now is 100% accepted as both EGO and AUY have outperformed since Q1 2019 and Q1 2020. For full disclosure the mistake I made in 2020 was to buy more EGO over AUY (vs buying equal value in both in 2019). This means my total 2019-2023 performance is not 170-180%, but about 100%-110% which still is double that of indexes and what is my goal every 5-10y period. For 3 of these 5, this is a perfect as it can be. I also added more of these miners in 2021, including $KGC and $GOLD (Barrick Gold, not physical gold). I had also explained that in 2021-2022 I am looking to add silver miners like $EXK, $FSM and $PAAS. 

I am still have over 50% of my assets in Uranium and gold miners. I have sold off some of my AUY position to buy $NVDA (more here) and crypto miners (more here). 

Prediction 5B: too early to comment, relevant for future

Prediction 5C: too early to comment, still relevant for even more distant future

If you are at all curious where this list of predictions comes from, it's from the e-book I wrote to guide myself through the period of 2020-2035 and ideally to 2100. You can open the original link (of my publication on LinkedIn) of this publication from here.

Practical applications of this summary

To me I have been correct in seeing what to broadly expect of the world and financial markets since 2018-2019. This e-book, has been my own tool and resource as a summary of all my views of the 2018-2019 and 2020. I wrote as a way to guide myself if I am ever lost during the crises I foresaw. I also wrote it to give a general idea to the world of how the world might change.

As of now, I use the same book to remind myself that 2021-2022 I was bearish and as of January 2023 to 2026 I am bullish. I will have to see more, but it would not surprise me if we have a 6-10y bull market to 2029-2033. Only after this, I do believe we may experience a more prolonged 5-10 years bear market. While CNBC and Dr Burry have been arguing 2021 is the year where we will have a meltdown like the great depression, my book since 2020 states I expect this in 2030-2035.

Because I have given forecasts from 2020 for the next 2-3, 5, 10-15 and 100 years, I do not see a reason to change any of these views I had in the book. Therefore, I continue to use my own book as the basis of my framework for all of my investment decisions.

P.S. - I am 2 for 2 crises since 2018. Not to brag, BUT I did see them both, does this make me special?

Those who know my work and writing since 2018, know that since 2018 I believed we had nice 9 years of performance from 2009 to 2018 and as of 2019, once 10 years have passed, I personally am preparing myself for at least two crises likely to be 2020 and 2022. This has been my operating framework about the world for the last 5 years. Below I have put also the pre-COVID-19 draft about the first crisis I expected in Q1 2020, which actually happened by time I was able to publish this e-book. So this is to show that I had a draft on it and once it happened, I focused my book on the 2021-2022 crisis which no one expected.

Figure 16. Notes of 31.03.2019 for COVID-19 crisis based on yield curve inversion + new tallest building planned

This is in a way to show that in Q1 2019, my common sense told me that people are too excited and eventually this ends only one way - with a kind of meltdown, economic collapse, crisis or whatever you may wish to call it. 

So after about 5 years of caring about markets and investing in them since 2013, in 2018 I believed that this nice period for me was about to end. However, these two crises will have something positive in them for me. In other words, if I was correct that there are two crises in 2020 and 2022, by beginning of 2023, enough people would get discouraged from markets to set us up for nice returns from 2023 to 2030-2035.

Overall, I hope this shows it is not true that no one predicted the crisis. The more accurate statement is "only a NOONE who is trying to become SOMEONE" predicted these two crises.

Ideally this also shows that I did not plan to make money in 2021-2022 because I expected a crisis that affects us all. I also have a moral problem with shorting markets and making money off people's suffering (causing them to lose their jobs) due to poor stock performance (from the shorts).

Being a patient, well-rounded and having my own unique view is what people either love or hate about me. I can now say that writing that e-book brought me so much pleasure. No one wanted to read about a crisis back then, everyone was hopeful. Now, everyone is gloomy, which makes me hopeful.

"The best predictors of the future aren't smarter, they are just willing to take one more look, one more time than the other folks." - Adam Grant, Think Again

If you apply this quote to my book, I'd interpret it as if I was correct on all predictions up to what has happened in real life, I am hopeful for my future predictions and the only place I need to look to remember what my plan is, is my own e-book. And I put it up there for free, just to show to myself that people really are clueless about valuing stuff (in this case to think about a potential crisis instead of thinking that good times will never end), as only a few people found my book valuable. Well, maybe this summary shows a part of its actual value and my happiness with my own value and the value of my e-book. Being a contrarian is always difficult (because no one agrees and everyone thinks you are an idiot), but very satisfying most of the times (like in this one, where this particular contrarian saw how the world will turn by 180 degrees from happy to suffering).

Either way, I found it extremely useful to take a look one more look, one more time, at my own book and clarify to myself exactly what to expect in the coming years. After all, I guess one may now recognize why such a wonderfully instructive masterpiece took me over a year to write (it was the combination of all my outlooks based on 7 years of looking into the market).

Me in 2019-2020 when writing books about 2 crises; Also me selling Bitcoin miners January 2021 (when Bitcoin was about 60k).

Also me in March/April 2020 when I was buying and me now buying since August 2022 and January 2023 when people are saying we will have a 10 year bear market

All due to my own content of my own book. Thank you brain.

P.S. 2 - predictions vs execution

This by no means to say I bought only these 2 times and I have executed all trades 100% perfectly. I am buying stocks and cryptos as a buy and hold strategy since 2013 and 2016 respectively. I also purchased some stocks in Q2 2021 and Q4 2022, which fell by -30% to -50% (I bought NVDA at $178 and it dipped to $120, now is $230 but as an example that I didn't hit the perfect dip/low). One particular segment I bought was -90% - Medicinal cannabis, and ironically buying at -90% puts me at -70% due to the sector being down -99% from highs. Overall, despite this, I have locked over 80% gain on above 60% of my 2019-2020 buys in 2021. I'd say, realizing it's time to sell of at least 60% of my assets in Q1 to remain on plus despite all big dips was in retrospect, the smartest thing I have done. This puts me at about +50% relative to S&P and +55% relative to NASDAQ for 2019-2023.

*Just change CRYPTO with MJ*, LOL right?

I just also wanted to for full transparency put my one play that is not working out in the short-term (which I define as 5y or less), i.e. my prediction was that in 2020 we have hit all time lows and that by Q1 2023-2025 we will hit significantly higher prices. As of January 2023, there is absolutely no price evidence to support this (other than my fundamental analysis). So this is an example of a prediction, which has not failed because are not yet in Q1 2026, but is not 100% accepted like the rest. It is worth noting that I also have wrong decisions (in terms of efficiency, i.e. the exact price to buy), but I would like to think I never make big picture mistakes (in terms of effectiveness, i.e. being down -70% is acceptable if by 2030-2035 MJ stocks have produced 100-200x returns, averaging over 3000% per year from 2020 to 2030 or at least about 1000% per year to 2035). I will have a separate piece on this. The key reason behind my decision was that if I am buying something in 2020, it would ideally be something which the US economy could use to generate new tax revenue and jobs (i.e. legalization of cannabis) could help increase GDP growth of the US, in a way, to deal with the consequences of the 2021-2022 crisis. Since 2020, I believe that Biden will be the US president who legalizes cannabis. He didn't do it in the first two years, now in his third or fourth year of presidency, I imagine that medicinal cannabis is the first segment which is likely to be legalized which is why I own medical cannabis stocks, the ones I like are $TLRY, $ACB, $GRWG, $SMG, $HEXO. This is to show, my prediction may eventually be correct but does not prevent me from suffering -70% on these positions and being -70% is the type of price I am willing to pay to obtain a 100x on a 10y-15y basis. This is how I invest in entirely new segment of stocks (which together has less money invested than Bitcoin itself). So to me, these will eventually reach new highs and I am willing to wait 5-10-15y and judge my decision based on the return on the full period basis from 2020. Had it not been for these, I'd be above +100% relative to NASDAQ and S&P, but due to these this is lowered in the +50% vs the S&P (which is about 50% up) or about +100% for me, Q1 2019-Q1 2023.

So far, 0 predictions have been rejected (failed) and to me, this is the most important point. I have given myself to Q1 2026 to find out about 2-5 more of these hypotheses, after which I will make another piece to follow up on this one.

Of course, it is not 100% that all predictions are 100% accurate. I will probably have at least 2-3 rejected, given that I wrote from 2020 for the next 2,5,15 and 100 years, just to show that the overall tendencies of markets are actually very predictable (some details I will get wrong).

If you read this entire piece, I thank you for your time. I hope it did provide some value to your life. And if you are still curious to read more things, you can return to my home page via this link and find 6 more pieces. If you do not see them all, click the button "MORE POSTS" at the bottom of the page.

Reminder

If this is the first piece that you read on this blog, I strongly advise you to go to the "purpose of the blog" page to understand what this blog is about. You can do this by clicking here. At least scroll down to the middle of the page and read the section called - "What does this blog include?" for an explanation on each of my blog series and the type of content that is included in each of the series.

Disclaimer

No one should buy or sell anything because of anything I post inside my blog. This is all that it is, a way for me to track my own thoughts, organize my research and share my unique opinions. Any opinion posted on this blog is just that - an opinion. The purpose of these pieces are to act as a motivational information tool. This is a blog about my life goals and the decisions I use to try to achieve them.

Nothing on this Blog constitutes financial or investment advice, a recommendation that any security/cryptocurrency, portfolio of securities/cryptocurrencies, other investment products, transaction or investment strategy is suitable for any specific person. Every person has unique personal circumstances, financial situation, goals, and risk capacity. No one should use the content of this Blog to make financial decisions.

In short, nothing in this blog is financial advice! Do your own research & Do your own due diligence. If you have investment questions, I highly recommend you seek help from an authorized (regulated) financial planner, which I am not.