In today’s Baron’s, Mike Santoli discusses “A forecaster worth listening to sees more gains ahead.” He has penned missives such as “A Bear Is in Sight” and “Why This Rally Is Really Different”

Santoli adds:

This guy, though, is the one whose dispatches I saw as the very uncertain market trajectory took shape, illuminating the real-time contrast between his high levels of conviction and clarity and the deep ambivalence and confusion enfolding most of us.

He doesn’t claim any magic formulas or proprietary systems. His approach is eclectic and inclusive, ranging among economic, technical, historical, valuation and sentiment inputs. He’s in the business, as a broker, and shares his missives with clients. And he still doesn’t want to be identified. But his current thinking isn’t less valuable for being presented without attribution.

Two questions:

1) Most compliance departments go beserk over this stuff. Do many retail brokers do these sorts of emails without their firms knowing? Any insights?

2) I am curious if anyone knows who this broker/manager is. You can contact me directly, rather than post his name in comments.

>

Source:
A Really Different Rally, Again
MICHAEL SANTOLI
barrons, December 12, 2009

http://online.barrons.com/article/SB126057496212588073.html

Category: Analysts

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

26 Responses to “Mystery Writer”

  1. spudvol says:

    Nice irony- they call them brokers and that what we all have become, broker.

  2. gps says:

    Barrons article would get attraction. Author has done it. He would get more page views. Nothing much. It doesn’t matter whether markets go up or not. But article like this is nothing but is an attempt to catch focus. Its like a fiction story.

  3. investorinpa says:

    I’m smelling a sham in this article. At first, it sounded like Jeremy Grantham’s missives, but he’s bearish. Sometimes a market caller can have a 4-5 year hot streak where they are on fire with getting predictions right. At some point, however, it comes to an end. Temptation is to find out who this writer is talking about and follow thru his recommendations, but I think it was a great literary trick.

  4. hue says:

    it’s CNBC Sucks. sorry i meant to email you.

  5. w/Rupert atop the Dow Jones masthead, this: Temptation is to find out who this writer is talking about and follow thru his recommendations, but I think it was a great literary trick.”– investorinpa

    is, more than, plausible..

    also, with this:
    “To set the scene, dial back to Nov. 7, 2007, when he wrote “A Bear Is in Sight,” with the Standard & Poor’s 500 at 1520, after having retained a bullish stance since the prior bear-market lows of 2002-03.

    His bottom line was this: “The coming bear market will be severe…The worst performing sectors will be where all the current excesses lie. Commodities, especially oil, alternative energy, financials, housing, commercial real estate and industrials will be absolutely devastated.

    “The Fed will have to lower interest rates all the way to 0% and we will face similar problems as Japan faced in the 1990s. Long-term Treasury bonds will be the best investment during this extended bear market. The secular bull market in long-term Treasury bonds will not end until next decade with the 10-year Treasury bonds reaching 2% before they bottom.”"

    if that ‘broker’ wasn’t able to set himself, and his clients up for permanent ‘Retirement Optional’-status, he’s a, total, idiot/chimera..

    and, this: “..Our guy writes that he’s “dumbfounded by the refusal of the media, investors and economists” to acknowledge the prospect of a V-shaped economic recovery given the pace of improvement in employment, industrial production and leading indicators.

    He’s calling for the S&P to run to 1200 or to 1250 by mid-January, hitting a high some time in the first quarter, followed by a 10% correction into late summer or fall, but not one leading to a resumption of the post-2007 downtrend. This would echo, roughly, the 2004 market..”

    is the perfect line to ‘keep the Frog, in the Pot.’

    anybody have any good explanation as to why, said, dude, would want to remain ‘nameless’?

  6. bullionaire says:

    If he followed his own advice for the past couple of years, he’s likely done very, very well for himself…

    that tends to give a person a level of comfort and confidence and perhaps even some self-justification, especially if they stuck their neck out a bit the first go round.

    so, you may get a little complacent, and not apply the same level of rigor to your analysis, without even realizing it – sure you may think you’re applying the same process to the same variables with updated set of data points, but the model may not be dynamic (take into account changes to or new variables introduced over time) or it may simply fail – models can never replicate all the complexities of the real world and are inherently prone to failure as part of their life-cycle of iterative modification & improvement…

    Ignoring the major components that caused this downturn, that include excessive debt levels caused by over-consumption in housing, SUVs, leading to financial failures, growing unemployment, wasteful government expenditures on failed financial & automotive companies in an inexplicable if not insane attempt to reflate the bursting bubbles that precipitated the mess, well, I need some pretty hard & reliable numbers, certainly a lot more than presented in the article, to be convinced he isn’t just blowing something out of his A$$…

  7. X on the MTA says:

    Hi Barry,

    I work in retail brokerage designing and implementing technology systems for a compliance department in a boutique IBD. I am a registered rep and principal and very familiar with all aspects of this type of thing, and if this guy worked for my firm, which has relatively lax compliance standards compared to big wirehouses , he would be U5d in a split second.

  8. I took it as a challenge, like when the Wired writer vanished and dared the readers to find him . . .

  9. chancee says:

    I simply don’t agree with the ‘mystery forecaster’ referred to in the Barron’s article. A simple study of charts from prior bear market/crashes could have foretold of the bounce we’ve had. Almost all retrace a 50% or 62% move. That’s 1120 for 50% and 1225ish for 62%.

    But then that’s where reality sets in, and the market responds accordingly. People who insist on comparing our current situation to the 2003 bounce and ensuing cyclical bull market have their wires crossed. The 2000-20001 bear market was the result of primarily ONE SECTOR going bust – technology. And the worst of it was for the most part contained to this country. Furthermore, we were only able to incite a new bull market because of low interest rates. The reason the market continued onward in 2004 is because of the interest rate environment and genesis of the housing bubble.

    But the curtain has now been pulled back on that trick. The debt has been building and is now at unimaginable and unsustainable levels. We can’t create another housing boom to get us out of this.

    Even worse, not only are all sectors of the market involved, but the entire world has been caught up in this disaster. And it’s so, so, so much more than a sector issue, derivatives issue, or even a housing issue. It’s a generational/productivity issue. Real productivity peaked in this country in the decades just after WW2, and has been waning ever since. The introduction of derivatives and subsequent bubbles have only been methods created to squeeze productivity out of something that isn’t there.

    Soon, if not already, two-thirds of Americans (Boomers) will be receiving Social Security benefits. That’s not a recipe for productivity. As reality sets in, I PREDICT we will return to those March lows.

  10. ben22 says:

    Mark said:

    “anybody have any good explanation as to why, said, dude, would want to remain ‘nameless’?”

    See X on the MTA’s response for starters…..

    It’s real simple, he wants to keep his job, sound strange? Welcome to compliance, it’s not for clients…..

  11. ben22 says:

    I’d also add that when he is wrong, and he will be eventually, nobody is going to know his name either.

    Bob Prechter has been “more right” than this guy, he didn’t need to wait until April to call for a major rally he did it on 2/23/09 telling people to move out of shorts “big market rally coming”, and was right there at the top as well, recommending an all in short on the S&P with leverage which made you a fortune if you followed. But, as many people are aware, he missed all of the 90′s bull market, so nobody really cares that he was spot on for the biggest market disaster since the depression. He only gets a few mentions in Abelson’s column from time to time, typically an afterthought.

    There is a great deal of appeal in laying low…..

    If this broker is as smart as he is presented, he obviously understands this.

  12. hue says:

    before Prechter was known as a perma bear, he was a perma bull in the 70s. when you look at grand super cycles, you can be off by 5 years in a 200 year trend … http://bit.ly/44mmcE

  13. DonF says:

    It’s been a long time since I was a retail broker, and a long time since I took the Series 7, but any written correspondence with clients needed approval before being sent out to a client/potential client and a copy needed to be kept on file for six years. And yes, some brokers sent out unapproved correspondence anyway, and yes if the firm found out about it the compliance team went absolutely ape shit and it was a very serious offense. Like I said, it’s been years, so not sure how the law has changed, but it seems to me by X to the MTA’s comments that it is still accurate, and that this is a bit far-fetched to believe.

  14. VennData says:

    Karl Rove could “out” him, if the mystery man (woman) is trying to protect us from terror. Talk to KR, he’s not in jail… yet.

  15. Steve Barry says:

    I’m sure many forecasters worth listening to see a collapse coming too. I often find Santoli’s writing to be shallow at best.

  16. David Merkel says:

    There’s not enough data in Santoli’s article to go on…

  17. tradeking13 says:

    It is Ben Bernanke. Only he could have imagined a 0% Fed Funds rate.

  18. Byno says:

    This has to be a very small (in terms of branches/salesforce) independent broker dealer. I retired from the biz without a single customer complaint in my career, but as X on the MTA suggested, had I sent out a newsletter without compliance approval (and I sent many, many newsletters out) I would have been U5ed despite my production numbers and clean U4.

    I’m told from friends still in the business that the way the game is played now, you’re either a salesperson or a money manager but never both at the wirehouses and large independents. As such, writing a newsletter – especially one that is 12 pages long single-spaced – is not selling and therefore not allowed.

    Just my .02

  19. so the dude, in question, is bending the Spirit, if not breaking the Letter, of the Regulation?

    Santoli is condoning/aiding this?

    Maybe, Mike should take some time to peruse http://www.spj.org/ethicscode.asp
    or, potentially, to save time, try their version of 1(800)Rent-A-Clu 317/927.8000 x208
    http://www.spj.org/ethicshotline.asp

    thanks y’all, for the ‘up to date’-Regulatory answers. Seems like more proof that Regulations, no matter how onerous, will not stop People’s misbehaviors..Maybe, we should learn something from that, at least..

  20. rileyx67 says:

    Certain the “mystery writer” not one of these two, but his 2010 predictions are virtually the same as Morgan’s Thomas Lee and Goldman’s David Kostin, in the annual Bloomberg poll of Wall Street strategists.
    Interestingly, those two were tied for most accurate in ’09 (thus far?) targeting the S&P at 1100!
    Re. Prechter, last time I checked CXO’s “Guru Grades”, he had an accuracy grade of 33%.

  21. Jessica6 says:

    Our guy writes that he’s “dumbfounded by the refusal of the media, investors and economists” to acknowledge the prospect of a V-shaped economic recovery given the pace of improvement in employment, industrial production and leading indicators.

    Um, that’s been pretty much the story of CNBC over the past year and the reality is that the leading indicators still suck if you look at actual numbers or relevant comparables not in the innumerate headlines.

    It took no particular genius or foresight to see that a big crash was going to happen by mid 2007 when commericial paper freezed up. And plenty of people saw the bounce in March which would never have lasted as long as it had without some serious efforts by central banks all over the world. People are right in their predictions, of course, until they aren’t.

    But I think there’s another leg down coming – probably in mid-Q1 unless there is again some pretty serious government intervention.

  22. 8196 says:

    This type of e-mail happens all the time. It used to be done using fax machines and prior to that the U.S.mail. It is a nightmare for compliance depts. These e-mails can be viewed as recommendations and solicitations. Since it is coming from a broker at a Financial firm, the firm actually takes responsibility for its content. Rightly or wrongly it is the way it is. Simple disclosures do not necessarily vindicate the sender or the senders employer.

  23. dss says:

    I didn’t see anything in the article that says that his firm doesn’t know that he is writing these letters, only that he doesn’t want to be identified to the general public.

    What broker who has a great track record whose presumably makes his living from his customer base in some manner, would not want to advertise this fact? What firm would not want to gather more assets instead of having a closet super star in their ranks?

    What client wouldn’t be bragging about their fabulous broker and his firm at social gatherings?

    Something doesn’t ring true.

  24. dd222 says:

    No need for the confusion, it is simply Goldman doing God’s work in their mysterious way

  25. hue says:

    it’s probably John Paulson, whose compliance department won’t mess with.

    it’s not likely to be a broker at any well known firm or small independent. people who can write 12 single typed pages don’t tend to be brokers or sales people. plus like many said, if they have a track record like that they would talk endlessly about it.

  26. hue says:

    12 typed pages, single space