Well, the new Business Week is out. Its the special year in preview forecast edition. I am participating in it again this year.
You may be wondering why someone who believes that "Forecast is Folly" and has exhorted you to "Be Neither a Bull nor a Bear" ended up as the outlier — I was low man on the totem pole in terms of both US Equity expectations and recommended U.S. Equity exposure — in the survey of 75 strategists, economists and analysts.
I plan on addressing this extensively in the New Year. If you are a regular reader of this site, you should be well aware of what my concerns are. I will lay out the full Bear case (in painful details) the first week of the year, along with the corresponding counter arguments. From these you may draw your own conclusions.
Meanwhile, here’s something for my fellow data freaks out there. I massaged all of the market call data (ever so painfully) into an Excel Spreadsheet — BusinessWeek 2006 Forecasts.xls.
I’d love to see what y’all can do generating studies and charts from the data. As an example, have a look at what Tim Iacono of TheMessThatGreenspanMade pulled together from it. I’ll take the most informative and intriguing charts and post them in this space after the holidays.
One emailer asked me "how much confidence do I have" in my market call. Given the philosophical expectations I approach all trading postions with — a specific attitude that I Expect to Be Wrong — my answer may not surprise you: Not very much.
However, I do have more confidence in my own call (with all expectations that I may be wrong) then that of the very Bullish herd.
Sources:
The BusinessWeek Market Survey: Where to Invest
December 26, 2005
http://www.businessweek.com/magazine/content/05_52/b3965416.htm
The BusinessWeek Market Survey (PDF)
Businessweek market survey 2006.pdf
2006 INVESTMENT OUTLOOK
Downloadable Spreadsheet
BusinessWeek 2006.xls
The Folly of Forecasting
RealMoney.com Contributor
6/7/2005 1:05 PM EDT
http://www.thestreet.com/_tscana/comment/barryritholtz/10226887.html
Bull or Bear? Neither
RealMoney.com Contributor
4/26/2005 7:20 AM EDT
http://www.thestreet.com/_rms/comment/barryritholtz/10219637.html
Expect to Be Wrong
RealMoney.com Contributor
4/5/2005 7:15 AM EDT
http://www.thestreet.com/comment/barryritholtz/10215965.html
That, my friend, is a bold call on your part. Gotta respect that – you’ll either look fantastic or be totally wrong – whereas most of the middling crowd will be somewhat right or wrong. But of course, that is why the mutual fund business is what it is…
Someone should do the same for the major hedge funds – if they were willing to talk.
Also interesting: 42% of the people are bullish on technology (no doubt based on the idea that corporate balance sheet are going to cause spending in that area).
Posted by: Damian | Dec 22, 2005 9:56:57 AM
That, my friend, is a bold call on your part. Gotta respect that – you’ll either look fantastic or be totally wrong – whereas most of the middling crowd will be somewhat right or wrong.
THAT MAY BE WHY BARRY WROTE “You may be wondering why someone who believes that “Forecast is Folly” and has exhorted you to “Be Neither a Bull nor a Bear” ended up as the outlier”. BUT, THESE GRAND PREDICTIONS AND FORECASTS USUALLY SERVE NO PURPOSE.
Good point Larry!
I would encourage you to dig into Technology Review and other publications in addition to things like BusinessWeek and stock market magazines. Technology Review may not spell out a list of stocks, yet it does provide understanding of industries and technologies that may allow one to connect-the-dots and find investment insights that are more profitable than BW.
A compact reference for writing your bear-case is EPI’s latest, available at http://www.epi.org/content.cfm/pm110 Yes, EPI is partisan, but statistics are not.
A few samples:
– inflation adjusted wages are still lower than 11/2001 (the start of this ‘recovery’)
– median household income fell from 1999 to 2004
– the household after-tax debt-service ratio is an all-time high
I am not betting against the market yet, but I would not bet on big US consumer growth going forward either.