No Crystal Ball

It's time for a confession. I hate to disappoint you, but here we go: "I have no idea where the dollar is going!"

At virtually every client event I’ve attended over the past 20 years, one question has come up as predictably as the sun is rising: "What is your opinion on the dollar?" Or even more specifically with a time frame: "Where do you see the dollar in six months?”

Anyone who’s been in the business as long as I have will answer such questions confidently and without hesitation. You start with economic developments and central bank policies, throw in some inflation metrics and interest rate differentials and top it off with a dash of geopolitics and purchasing power parity. Voilà – the recipe for a seemingly well-founded opinion on the dollar.

That's how the others do it too, right? And they don't hesitate to publish exact forecast figures. I fear that most of them are genuinely convinced that they can outsmart chance. 

If you don't believe me, just google "dollar outlook" and – lo and behold –right at the top of the results it says: "Over a six-month horizon, we expect EURUSD to trade around 1.1100." It's as simple as that. Though I must say, I’m a little disappointed. If they were really serious, they’d project 1.1101 or 1.1099. Studies show that non-rounded numbers are actually perceived as more competent and correct. So please, if you're going to engage in financial fortune-telling, do it properly. 

But let's take a few steps back. Truth is, I don't actually give this confident answer without hesitation. My go-to answer is exactly the opening statement. When my colleagues first invited me to speak at a Gutmann client event, I gave them a real scare. What do you mean, you have no idea? 

That is exactly the point

It is important to admit when something simply cannot be predicted. Nobody knows how the US dollar will develop in the coming days, weeks and months. This also applies to the stock market and all other financial markets. Complex, adaptive systems with millions of participants simply defy prediction.

But what does that mean? Can money be managed like this? Yes, absolutely! The solution lies in forecast-free and disciplined investing. Tailored to your goals and aligned to your risk tolerance in achieving them. Ideally with Gutmann experts at your side to advise you, but certainly without a crystal ball.