Posts filed under “Media”

Follow Up GMSV Predictions

Last year, I contributed a forecast — one of a series — to Good Morning Silicon Valley. Its kinda interesting looking back at the choices, and grading myself. (I should really do that on a quarterly basis). Here’s the intro, with the predictions and grades below:

A preface: I’m amazed that so many people in my business waste so much time and energy at “forecasting” and “prediction making.” Its been unequivocally demonstrated that NO ONE has been able to accurately — and consistently — forecast markets in real time. Sure, you can get the direction right, or the timing right, but nobody does both on a regular basis (There’s a ton of mathematical analysis proving this). A classic example: the year end predictions as to where the Dow and S&P500 will be this time next year, running soon in major business publications. Its irrelevant, and the “experts” are surprisingly wrong.

I approach my job from a different, more tactical perspective: What are the likely probabilities, and how should we position ourselves in front of those forks in the road? What do we do when we are wrong, or when an unanticipated course of events arises? The secret is not being right. Rather, it’s recognizing when you’re not right, and reversing yourself quickly before serious damage is done. Unfortunately, that’s a lesson too few learned in the ’90s.

Not a bad intro; But its not a prediction, and is therefore, remains unrated. Onto the November 2002 predictions:

1. The Bull Market returns! The Nasdaq doubles, and happy times are here again! Sorry; I was only kidding – but for a split second, you really wanted to believe that, didn’t you? The more likely scenario: The major indexes remain range-bound for several years, with an occasional sell-off followed by vicious Bear Market rallies. Sector rotation and asset allocation are what drive money flows in and out of the market.

I’d give this a “B+” Its only a year later, and while the market hasn’t doubled, the Nasdaq is up 70% — and I was only joking. But the trading range and vicious rally/sell off thesis remains intact.

2. By 2004, stocks are roundly despised by Main Street; interest rates have stayed low enough (due to overseas deflationary factors, especially from China) that bonds remain an unattractive alternative. The silver lining is that instead of investing, families spend more on big and little ticket items: they take more vacations, spend more on their homes, buy lots of toys (cars, boats, iPods, TiVos, and the like). The widespread hatred of stocks, combined with this continued spending is what precedes the Bull Market of 2009.

Another “B+” Interest rates remain at 50 year lows, with the Fed promising it will stay that way for a “considerable time.” Prices — outside of health care and education — continue to slide. Deflation from China AND India is pressuring wages and tech goods lower. The prediction of increased consumer spending was surprisingly accurate — especially cars, homes and iPods! This would have been an “A-” except for the last sentence, which appears to be overstated — for now (it may ultimately prove to be prescient).

3. Revenge of Rainman: The rising tide does not raise all boats — the dismal 2002 Christmas season finally delivers the knock out punch: K-Mart does not survive its bankruptcy process and dissolves. K-Mart’s demise benefits Target and, of course, Wal-Mart.

D” While the Big K is still around, it has been seriously damaged. Yet every day they survive, improves their odds of making it through this period. Not a winning call on my part.

4. Long-term deteriorate: The big banking houses continue to lose clients, assets and employees. By the time 2005 finishes, once mighty Merrill is almost halved. At its 2000 peak, it had more than 20,000 brokers and $1.3 trillion in assets under management. Merrill slims down to about 12,000 and just under $1 trillion. Brokers depart for smaller, more personalized asset managers – or leave the business altogether. Morgan Stanley and Smith Barney suffer similar fates. Surprisingly, none of this affects investment banking much when it finally returns in 2005.

C+” While Merrill has been shedding brokers and accounts, their assets have stayed healthy, but did dip under $1 trillion. The rally since March has certainly helped out. Banking is starting to return, somewhat faster than expected. Perhaps this could be a “B-,” if you’re feeling generous.

5. Big Hat, No Cattle: SEC Chair Harvey Pitt finally succumbs to the effects of his own hubris and incompetence. He resigns or is forced out during some scandal of summer ’03.

A+” I was way ahead of the pack on this one, and I’m taking full props for it.

6. Dead or Married: DEAD: One from each of the following pairs goes buh-bye: Lucent/Nortel; VA Software/Red Hat; Dynegy/Calpine; MARRIED: One from each of the following pairs gets taken over: Gateway/Apple; Yahoo/Cnet; Borland/Novell; E*Trade/Ameritrade; Citrix/Neoware.

F, F, F!” Not a single one of these predicted deaths or marraiges happened. Indeed, most of these were terrific buys when I was dissing them!

Finally, my long-shot predictions of possible, but doubtful (a wish list of sorts):

-Congress finally “gets it,” and outlaws spam;

Gets a “B” — they finally got it - now what are they going to do about it?

-The Supreme Court overturns the seemingly never-ending copyright extensions, recognizing that the intent of the Constitution was to establish limited copyrights for the benefit of authors, not corporations.

F” Yeah, like I had a shot with this one — I actually thought for a brief moment that the 9 doddering incompetants would understand what the word “LIMITED” meant; My bad.

-Lastly, the heads of both the RIAA and MPAA resign in disgrace. (A boy can dream, can’t he?)

A+ on the RIAA, B+ on MPAA, who is rumored to be seeking to replace the 82 year old Valenti with the contemptible Billy Tauzin . . .

Category: Finance, Media

A funny thing happened to me on the way to the studio tonight . . .

Category: Finance, Media

Kudlow & Cramer tonite

Category: Media

Economists Weigh In On Sizzling GDP Report

Category: Finance, Media

“Neil Cavuto’s Your World” Appearence

Category: Media

Bush’s Reagan Moment?

Category: Media, Politics

Snow Job

Category: Finance, Media

Earnings misses give cheerleaders pause

Category: Finance, Media

VIX follow up

Category: Finance, Media

Reuters does VIX

Category: Finance, Media