In 2019 I continued my habit of making predictions about the year. This is primarily an exercise to hold myself accountable and evaluate what I thought to be true a year ago, but it gives me a chance to embarrass myself as well.
In 2018, I did better than I expected; this year I reverted to the mean. While I think I touched on numerous relevant economic and geopolitical trends from 2019 (Brexit, Donald Trump’s unpopularity, poor governance influencing IPO behavior), my specific predictions were poor. Further, even where I was directionally correct, I made predictions about things that had already occurred, unbeknownst to me (although I will say it is much easier to make predictions about things that have already happened). In 2018, my predictions were too vague; in 2019 they were specific but sometimes ventured into areas I didn’t completely understand. So, this is undoubtedly a learning process.
Below are my grades and perspective on my 2019 predictions; next week I’ll share my predictions for 2020.
- 100%+ growth in electric vehicle sales
Grade: WRONG
Not only was I way off on my estimate, electric vehicle sales may not even grow at all in 2019 compared to 2018 when all is said and done (at best, sales will be flat or up marginally). What did I get wrong? Outside of the Tesla Model III, there aren’t a broad set of electric vehicle models that fit consumers’ current preferences — this should change significantly over the next 18 months. Vehicle sales in the U.S. are also down overall and electric vehicles aren’t immune to this trend. I still expect that electric vehicle growth will pick up in the coming years, but in this case, my prediction being early is the same as it being wrong.
2. The United Kingdom exits the European Union via a “hard Brexit” (no deal reached)
Grade: WRONG
There were a couple of times where it was close, but in the end it appears that Britain will depart the EU with some sort of deal in January 2020 (although recent history shows it is a bit of a moving target). Ironically, while many conservative members of parliament would have been content with a no-deal “hard” Brexit, it is British Prime Minister Boris Jonhson’s recent victory in the polls that will give him the flexibility to make a deal and exit — he can lose some of the hard-liners by making some reasonable concessions in order to get a deal through given the cushion he has in parliament.
3. Donald Trump will still be President but will be staring down a serious primary challenge and be trailing in Republican primary polls.
Grade: Mostly Wrong
First, the part I got right — Donald Trump is still the President! Not a particular longshot there, although some were surprised.
Primary challenge? Yes, absolutely. However, most observers wouldn’t consider the campaigns by Bill Weld or Joe Walsh to be particularly serious (Mark Sandford also got in this year, but has already left the race).
Trailing in the Republican primary polls? No way. Polling puts Trump’s support amongst Republicans in the high eighties or low nineties.
I recognized the extreme unease some conservatives have about Trump, but I underestimated the degree to which the Trump Presidency has changed the Republican party and how closely aligned politicians’ political fortunes are tied to Trump.
This New York Times article provides good context and anecdotes on how the party has changed, noting that 40% of the Republicans who were in Congress when Trump came into office have retired or lost re-election. Representatives often retire if they don’t think they will win, but I think there was another trend happening in the 2018 cycle — Representatives who could have won if they’d toed the party line and been 100% in support of Trump, but didn’t want to do that.
It’s not that there are not conservatives that dislike Trump, it’s just that they aren’t ‘at the party’ anymore — a lot of people have just left active party participation because they think opposition to Trump is untenable in today’s Republican party.
4. At least one major bank will enter the cryptocurrency custody business
Grade: Mostly Right
This happened! Fidelity has been approved by New York state regulators to operate a cryptocurrency services business (including custody). It is still early days, but I would expect more firms to move in this direction in 2020 as well.
For the record, it appears this move was actually announced in late 2018 (which I did not realize), so I am only giving myself partial credit on this one.
5. In new IPOs, perpetual dual-class stock structures will fall out of favor, as major exchanges put major limitations on the ability to list dual-class stock
Grade: Mostly Wrong
So first things first — many major indexes have already placed restrictions on dual-class stock. Some exchanges do as well, but if anything the restrictions are trending towards looser, not tighter.
In 2019, WeWork also failed to go public, substantially related to corporate governance issues (including their perpetual dual-class stock). I think their very public struggles will result in more investor scrutiny and apprehension around corporate governance issues, but it is too soon to tell how that will all shake out.
However, WeWork aside, dual-class stock hasn’t seemed to be a very big deal for other IPOs this year — Lyft went public successfully despite complaints and concerns over dual-class shares. So, perhaps it makes a difference on the margin, but we’re not seeing the industry-wide trend I expected.
For those keeping score at home, that’s 2 wrong, 2 mostly wrong, and 1 mostly right. Here’s hoping for a winning record with my 2020 predictions — there’s always next year!
