Punters vs The Pros – who called it best in 2018

James Marlay

Livewire Markets

Each year we run the Livewire Outlook Series where we invite Livewire readers and a selection of fund managers to pull out their crystal balls and have crack at predicting what lies ahead for financial markets. Like many forecasts and predictions, the hit rate is patchy at best. Unlike most predictions, we do go back and review the results.  

I always look forward to revisting what was topical 12 months ago and seeing how these issues played out. In the interest of keeping things competitive I’ve tallied below the scores of the fund managers and included the Livewire audience results. 

We had more than 2,700 participants last year which was an awesome result. We’ll be running the survey again in 2019 so keep an eye out for that in the coming weeks. 

The RBA Cash Rate 

The official cash rate has been unchanged for another 12 months and remains at a record low of 1.50%. That setting has been in place since the 3rd of August 2016 when the RBA last cut the official rate by 25 basis points. 

I see today that NAB are now saying they don’t expect a hike until 2020.   

The score: 0/6  

The Dollar 

After cracking through 80 cents against the USD in January the Aussie dollar has been steadily declining through the year but always holding above the 70 cent mark.

If you look back a bit further, you’ll see the currency has been pretty range bound since 2016.  

The score: 4/6 

Bullish / Bearish 

In 2017 the ASX delivered ~7% return. At the time I was lamenting a unspectacular performance. As I sit here today the ASX200 is down about the same figure. It has been challenging to say the least and that 7% number is now looking pretty good. 

The score: 0/6 

5 big issues for 2018

We also pitched five scenarios and asked the panel and the readers if they were going to play out in 2018. These were based on the big issues making headlines 12 months ago.

Inflation picks up aggressively in 2018 in Australia? 

12 months ago, the big risk that was being bandied around was inflation. It remains elusive in Australia and sits at the lower end of the RBA target band. 

The score: 3/6 

Global tech stocks correct by >10% in 2018? 

Well we got this one right in spades. The selloff in tech stocks has been brutal in both the US and in Australia. In retrospect it seems obvious but there was just so much momentum behind these stocks. I think the interesting thing is that while prices have come off the selling appears to have been a PE de-rating rather than a 'tech wreck' 2.0 scenario. 

The score: 5/6 

Discretionary retailers will stage a recovery in 2018? 

2018 was the tale of two halves for retail. A cracking first half now seems like a distant memory. Consumer sentiment is heading south on the back of weak equity markets and a sharp falls in major city property values. 

Amazon has failed to have a meaningful impact but the reality is that retailers have a raft of other issues, many of which are beyond their control. 

The score: 4/6  

Telstra cuts its dividend again in 2018? 

This was a hot topic for one of the most widely held stocks on the ASX. Telstra didn’t cut their dividend this year, but expectations are that there are more cuts to come.

The share prices staged a mild recovery but remains well below recent highs. 

The score: 6/6 

Australia’s banks have a bounce in 2018? 

Does it feel like the banks have been on the front page forever? Well that’s because the royal commission has thrown up all sorts issues for the media to feast on. On paper it would seem like we have past 'peak bad news' for the banks. However, the earnings outlook doesn’t look amazing and a bet on the banks is a bet that they can reinvent themselves. I’d say they have their hands full right now.

Share prices have been soft and are a big reason for the poor performance of the index. 

The score: 1/6 

Ouch! 

That was a tough year for the predictions. Interest rates, bullish equities and a recovery in the banking sector really took a toll on the final score.  

Total: 19/48 


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James Marlay
Co Founder
Livewire Markets

Livewire is Australia’s #1 website for expert investment analysis. We work with leading investment professionals to deliver curated content that helps investors make confident and informed decisions. Safe investing and thanks for reading Livewire.

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