Risk goes both ways when you’re making a forecast and constructing an investment strategy.
For most people, the only risks to be worried about are the ones to the downside because that’s when things are getting worse and you’re probably losing money.
For Deutsche Bank’s Joe LaVorgna, the risks to his forecasts seem to be tilted to the upside. In other words, he thinks it’s more likely that the the U.S. economy will turn out better than he expects in 2014.
“Generally, when investors ask us this, they always seem to imply the downside risks,” wrote LaVorgna in a note to clients on Tuesday. “However, for us, the risk to growth is to the upside, not the downside. Beyond this, the primary downside risk in 2014, as it is in most years, is geopolitical, meaning we get some sort of negative exogenous shock such as an oil price spike.”
LaVorgna offered five predictions for the U.S. economy in 2014. Keep in mind, he thinks things are more likely to be better than worse than forecast.
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