Posts filed under “Apprenticed Investor”

From Worst to First Second: Business Week Forecast 2007

Bw_forecast

For the past 15 or so years, BusinessWeek has been doing a big year end issue, listing various strategists’ forecasts for market and rate expectations.

In terms of the "contest," its a combination of % gains from the S&P, Dow, Nasdaq, Russell 2000 and 10 year rate.

Despite my views on forecasting and investing, I’ve been participating in the survey the past few years. Its fun, and my firm always likes the PR, so my attitude has been what the hell.

My first year participating, I pitched BW on running a "Folly of Forecast" counter programming; That idea went nowhere fast: "Its a big double issue that sells lots of ads — You wanna participate or not?"

So I did. By coincidence, I was in the top few forecasts — right until the last few
days. Then the picks  slipped to somewhere in the top 10. It all seemed rather random.

The following year (2006), I stumbled into some infamy by making the most Bearish forecast by far (36% correction). As a macro overview, many of the issues we identified turned out to eventually become big problems. But as a market call, Dow 6,800 was pretty awful.    

The following year, I moderated the guesses. So you can imagine my bemusement when I got an email from BusinessWeek earlier this month:

"You are looking like our potential winner (barring
a sudden big move in the market), so I was wanting to get in touch with you as
well. I don’t see to have a current number for you. Can you give me a call?
Thanks."

It turned out that every pick we made — Dow, S&P, Nasdaq, Russell and the 10 Year Yield was spot on — all within 1% of current prices. To make matters even more amusing, our sector pick (Consumer Staples) did very well, and our best stock idea — Mosaic (MOS) — was far and away the biggest gainer amongst the pro picks, up 217% for the year.

click for larger table
Bw_forecast

I think you can see how this is going to play out.

"Barring a sudden move in the market?":  You guessed it — everything moved away from our numbers, and by the end of the week, I got the following email:

"So sorry I wasn’t in touch yesterday. Looks like the market gave you a bum break. By my calculations you’re not the winner, but are very close. Congratulations – and sorry things didn’t work out otherwise."

So, close but no cigar.

Congratulations are in order for Leo Grohowski, Chief Investment Officer, BNY Mellon Wealth Management (but was at US Trust at the time), who had the best predictions.

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Now for the really telling part: The old format — 80 or so strategists in a big double issue laden with ads? That’s now gone. Business week is now doing a much smaller version, with a dozen or so folks polled — much like last year’s WSJ version.

Blame the economy: While I can imagine assembling that issue was huge pain in the ass, but I suspect this year, the print advertising business was just too soft to justify the time and effort of a major issue.

The business is simply not there . . .

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Sources:
Fearless Forecasts from the Pros 2007   
BusinessWeek magazine   DECEMBER 27, 2006
http://tinyurl.com/3x3ube

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December 20, 2007, 5:00PM EST
http://tinyurl.com/27sh34

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