As with Nostradamus, only hindsight will tell

A few weeks ago I invited readers to send me their 2010 predictions. Most of the entries I have received are entirely sensible. From predictions about the value of the US dollar against the yuan to forecasts of further financial disaster in the world economy. I don't have space to list all of the entries, but I do want to give you a flavour of what I have received.

So, starting with the surreal: one reader predicts that conclusive proof will be presented that the human race is controlled by an alien race known as 'the Greys'; it has also been suggested that the H1N1 outbreak will be revealed as a conspiracy fabricated entirely by pharmaceutical companies in order to sell drugs; third, a perpetual motion device that produces more energy than it consumes will be revealed by the Chinese government; and finally that Alan Alanson's identity will be revealed as that of the chief executive of Hong Kong. I can't be 100 per cent sure about the first three, but I am certain that the last one is not going to be borne out.

Some of the more sensible predictions I have received are:

1 The AUS:USD exchange rate will reach 1:1

2 The yuan will appreciate 10 per cent against the US dollar;

3 The Hong Kong property market will collapse in the third quarter;

4 The US unemployment rate will reach 14 per cent;

5 Another US bank will be nationalised;

6 Natural disasters will bankrupt the insurance industry; and

7 The price of oil will skyrocket as a result of Israel invading a neighbour.

Most of the entries follow the same general theme, that the economic recovery is not really an economic recovery, that the US economy is in for trouble and that there is more misfortune on the way.

My own predictions and those that I have received are of course just amateur efforts. There are plenty of folks out there who make predictions for a living. Economists, market analysts, fortune tellers and celebrity psychics, for example, are all paid for their predictions because enough people actually believe that these folks know what they are talking about.

The most famous of all predictors of future events is of course Nostradamus. This big-bearded 16-century Frenchman apparently predicted every major event that has ever taken place on the planet, as well as several minor events. Depending on what you read, Nostradamus was able, in 1555, to predict the two world wars, the assassination of John F. Kennedy, the attack on the Twin Towers, the Iraq war and even the results of the 2008 Major League Baseball playoffs. The tricky thing however, about Nostradamus, and about all good predictions, is it is practically impossible to interpret anything Nostradamus said as a prophesy until after the event has taken place. For example, one of Nostradamus' most famous predictions is:

From the human flock nine will be sent away,

Separated from judgment and counsel:

Their fate will be sealed on departure

Kappa, Thita, Lambda the banished dead err.

Don't know what he is saying? Well, no one else did either until after the Challenger space shuttle exploded in 1986. Shortly after the shuttle disaster, several authors realised that Nostradamus was trying to warn us of the danger of the defective O-rings, and the risk to the lives of the seven astronauts on board, which is quite obvious from his use of the word 'nine'.

This is unfortunately about as good as Nostradamus' predictions get. The genius is not so much in his ability to see the future, but rather in the creativity of modern authors to interpret his vague remarks as specific prophesies.

And this is a valuable lesson to anyone in the business of making predictions. Be as vague as possible, and you'll increase your chances of scoring a hit. Don't say: 'There will be an economic collapse in the second half of 2010', say 'there will be an economic event in the medium term'. Don't say that prices will go 'up' or 'down', say that they will be 'volatile'.

And if your predictions don't come true, it's not your fault. No one can really see the future whether they're paid for it or not. An entire army of economists missed predicting the financial crisis, not one celebrity psychic foresaw the collapse of Tiger Woods' reputation and I'm only aware of one person who really thought at the beginning of 2008 that Barack Obama would beat Hillary Clinton to win the Democratic nomination and then win the US presidency.

The only people who really know what's in our future are the members of the alien conspiracy that control the human race, and they're not talking.

Alan Alanson is an investment banker who writes under a pseudonym. Contact him at [email protected]