Stocks Will Fluctuate

JC Parets
December 28, 2019

It's that time of the year again. They all keep calling and emailing me asking for my "predictions" for 2020.

What do you want me to say?

I have no way of knowing what's in store for next year, yet alone what to expect in December of 2020. And I think it's really important to reiterate that. This idea of the unknown unknowns gets lost in the shuffle.

Sure, we were fortunate to make some good calls this year. Our customers have only sent us positive feedback. But as Babe Ruth once said, "Yesterday's home runs don't win today's games".

So 1) anything we did or said in 2019 doesn't matter in 2020. And 2) you need to have some nerve to think for one second that you have any clue what will transpire over the next 12 months.

But here's what we CAN do. And here's why Technical Analysis is so damn valuable. We know what questions to ask. We know what trends to look for. We know what will help us adjust our strategies as we get more data.

The point of this post is to help us all remember that we have absolutely no idea what's going to happen, and we shouldn't expect ourselves to know. The media has a job to ask us, but even they should know better. And it's important that we understand that. It's to our advantage to recognize this fact: We just don't know. In fact, we don't even know how much we don't know. It's impossible to.

I believe it was Mark Twain who said, "It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so".

This year was a fantastic example of why keeping an open mind is the only way to live. How many people and firms did we see this year stick with their narrative even though price kept proving them to be hilariously wrong? We saw it in stocks, in bonds, in crypto, commodities and currencies. Prices moved and they didn't adjust their strategy. They got steamrolled. And it well was deserved.

I have no doubt that this year will be similar in those ways. Some trends will change. Some trends will get stronger. New data will arrive that invalidates some of our current views. And it's up to us to either ignore it and remain stubborn, or be willing accept it, adjust and move forward. It's up to us, no one else.

In one famous incident, when asked by a passerby what the stock market was going to do next, J. Pierpont Morgan responded simply: "It will fluctuate."

I agree. Next year, stocks will fluctuate.

JC

 

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