This is the first of three articles on the outlook for 2021.
After a historical year that saw a 40%+ correction followed by new highs, the predictions for 2021 range from incredibly optimistic, to a great start but with a Spring crash.
Each year for the last six years, I review Raymond Lo’s predictions for the upcoming year as he is a Feng Shui master who comments on the Chinese New Year and how that should play out for the economy and market. His track record is not perfect. However, it is quite good and if nothing else, he gives metaphor lovers wonderful fodder.
What fascinates me is that February 4th begins the Year of the Metal Ox. Hence, as a backdrop to 2021, I will keep in mind the Ox in mind.
The oxen are also beasts of burden. It could mean that this coming year, the market will be able to take on a lot of the negativity and hold up regardless. Maybe we will see more of a stagnant market with a wide trading range rather than a raging or castrated bull market. Oxen never bully the weak, yet they do fear the strong. Oxen are also easily led by the noses by farmers while working, which is the sacrificing spirit of the ox.
To put some context on Raymond Lo’s work, last year was the Year of the Water Rat.
Lo predicted that “The general economic atmosphere is entering a bearish cycle and the pace of growth will slow significantly. With December also representing the Rat sign—and the peak of the Water Element in the winter season—it will generate a lot of fear and anxiety. The water element cycle is going to take over and prevail for the next four to five years. Pessimism, cynicism, and despair will set in and contribute to the economic decline.”
He was ½ right about the bearish market, but 100% correct on the pessimism, cynicism, and despair.
The Ox functioned as both God and a sacrificial object in ancient times, with it being a custom for some ancient people to offer oxen to their ancestors as sacrificial objects.
Now, if the market finds a sacrificial ox to offer in return for a continuation of the recent bull move, cool!
Nonetheless, Lo sees a decline in economic growth that will force investors to be more conservative and the public to spend less (which will cause demand to go down).
I agree with that for some areas, while for others, I see the public itching to go out and spend money once the pandemic is under control.
In general, the Yin Metal Ox Year is a symbol of a harsh and cold atmosphere that incites disharmony, conflict, assassination, and terrorism. As the world economy continues to decline, the atmosphere of distrust will lead to more social unrest, political struggles, international tensions assassinations, subversions, and coups.
Lo not feeling my Disney World analogy from the week prior.
Lo goes on to say, “Plus, with the drastic and extreme nature of Yin Metal, brute force and cold-blooded killing will frequent the news and heighten the emotional intensity of the year. People may choose to resort to violence in achieving their ideology and bring about more protests, demonstrations, and anti-government sentiments.”
We saw that in 2020 and although we hope for a calmer 2021, we fear he might be spot on.
And just when you thought we might be on the other side of the pandemic, Lo sees, “Natural disasters such as earthquakes, landslides, sea and air accidents, environmental disasters, and world epidemics that will continue to persist and prevail.”
So, what is the good news for 2021?
Because this is the Metal Ox, metal means activity and productivity, and Water inside the Ox also means money, as Water is Earth’s money. Lo predicts “Earth industries” including real estate, land development, mining, insurance, computer software, and technology will do well. As we already saw a lot of these areas prosper in 2020, we will look to see more of it in 2021.
Finally, Lo says, “Industries belonging to the Fire Element can expect prosperity because Fire conquers Metal, and Metal is Fire’s money. Fire industries include energy, power generation, restaurants, and entertainment.”
Restaurants and entertainment, that would be excellent news!
Michele 'Mish' Schneider currently serves as Director of Trading Research and Education at MarketGauge.com. She writes and produces daily market analysis in "Mish's Daily", and serves as a developer and trading mentor in several of our trading services, drawing on her 30+ Years of Trading and Teaching Experience.
Mish is a former floor trader on several New York Commodity Exchanges, including Coffee, Sugar and Cocoa NYMEX and FINEX in NYC. While on the trading floor Mish also served as a market analyst for two of the largest commodity trading firms at the time - Continental Grain, and Conti-Commodities.
Mish also wrote the best-selling finance book, Plant Your Money Tree; A Guide To Growing Your Wealth.