While I am reluctant to make forecasts about the path of economic growth or political developments, I am willing to predict certain terms or words will become more popular for investors in 2021. Not in alphabetical order:
- Valuation: An out of fashion and quaint strategy of determining the price of a security based on future earnings power or the balance sheet, as opposed to metrics such as the stock price itself or whether the name has been mentioned on Barstool Sports
- Schadenfreude: Enjoyment in the misfortune of others. What value investors will feel when at some point in the future, be it two months or two years, reality impacts many overvalued EV stocks.
- Economist: Someone who uses advanced mathematics to be wrong in the mid to long term (12 months + beyond) 100% of the time. See BIMCO shipping forecasts.
- Inflation (Economists): Prices going up everywhere but offset by more computing power for less money.
- Inflation (Milton Freidman): Money supply impacts price levels. Print more than output, prices will go up. See $1.9 trillion in proposed US government additional spending.
- Inflation (Average Citizen): Prices increasing for food and general goods at the store. Using crops for biodiesel and carbon capture and ammonia for transportation fuel will make food for human consumption more expensive.
- Moral Hazard: Paying workers more on unemployment than for working, and then allowing them to turn down jobs because they don’t feel comfortable.
- Stagflation: Unemployment and inflation rising together along with slower growth. What we are likely to see over time as the result of current monetary and fiscal policies.
- Supply and demand: The shipping investor’s best friend. No one built container ships for two years due to fear of US tariffs on Chinese imports, and then the world decides to restock from Asia, all at once. Container ships leasing rates and duration become sexy.
- The law of unintended consequences: The Sierra Club is opposed to natural gas and nuclear power. They want renewable energy to replace heating in homes. In the US, it would require doubling the size of the grid. That doesn’t include vehicle electrification. Go long copper, there isn’t enough to go around. Copper longs to Sierra Club: thank you. Also Sierra Club and others makes rational decisions on new ship propulsion difficult if not impossible, thus limiting new builds. Over time, the fleet shrinks as it ages, also raising the value of ships. See supply and demand.
- Irony: Using eco-friendly ships to carry coal to India and China
- 20-20 Hindsight: Whatever happens this year, someone on CNBC will say they saw it coming.
