Posts filed under “Really, really bad calls”
In today’s Barron’s, Mike Santoli very politely and quietly, using language suitable for a family dinner, calls Charles Biderman out for his clueless commentary about secret government cabals:
“One conspiracy theory gaining undeserved traction on Wall Street lately holds that the Federal Reserve or another government entity might — or must — have been a buyer of stocks or stock futures during the run higher off the March lows.
A report by fund-flow research firm TrimTabs Investment Research a couple of weeks ago intensified the usual conspiracy chatter in the blogosphere and across trading desks, suggesting the Fed might be goosing stocks because publicly observable fund flows (via mutual funds, corporate buyback plans and insiders) seem not to be able to account for the 70% gain since the March bottom. Aside from the observation that theories that assign blame to unseen forces are inherently the laziest of all possible explanations, there are many problems with this assertion.
Fund flows don’t capture changes in positioning by hedge funds, mutual funds, pension funds, individual stock buyers, foreign capital and others. The fact that long-short hedge funds outperformed the Standard & Poor’s 500 both into the lows last year and for all of 2009 shows hedge funds went from substantially hedged/short in the deleveraging phase to very long.
More broadly, why would the Fed have to buy stocks, with all it has openly done to penalize risk aversion by adding reserves to the banking system, setting short rates at zero and buying credit products and Treasuries? The whole asset spectrum has fed off these initiatives.”
Mike is a nice guy, and way too polite to write anything nasty — so I will add what he is implying. Outside of fund flows, Biderman’s track record is mediocre at best.
Further, the rise of hedge funds, dark pools and private trading networks means that there is much less volume information available for fund flow analysis — which is TrimTab’s bread and butter research.
So its no surprise that Biderman missed the turn, and has remained on the wrong side of the market’s 70% rally. He has concocted a half-assed government conspiracy theory, rather than admit the error. That is weak.
The analytical faux pas has provided a few positives: 1) It reveals that the level of skepticism amongst the public is still high; 2) Its a way to measure someone’s investing IQ. If they bought into the nonsense of this theory, then pull your money/delete them from the blogroll/unsubscribe from the newsletter.
Worse than worthless, they will cost you money.
TrimTabs: Its a Recession, and Its Already Over (Wrong) (April 2nd, 2008)
Trimtabs Continues to Abuse Withholding Data (April 23rd, 2008)
Trimtabs: Americans have stopped saving (?!?) (January 2nd, 2009)
PPT: The President’s Working Group on Financial Markets (January 8th, 2010)
Barron’s JANUARY 18, 2010
My publisher writes: Anyhow, I have a favor—Ben Stein has written a book for us, Little Book of Investing Dos & Don’ts — I’m wondering if I sent you some chapters you could write a sentence or two for the back jacket… I told them to read my prior Ben Stein posts: Farewell To Ben…Read More
Category: Really, really bad calls
There’s been a lot of chatter lately about secret cabals and the plunge protection team. I notice it seems to be coming primarily from those folks who missed the rally off of the lows. Rather than admit their errors, they are rationalizing them with discussions of secret government equity buyers. I addressed the PPT in…Read More
This is simply infuriating: “The Federal Reserve Bank of New York, then led by Timothy Geithner, told American International Group Inc. to withhold details from the public about the bailed-out insurer’s payments to banks during the depths of the financial crisis, e-mails between the company and its regulator show. AIG said in a draft of…Read More
In a post yesterday, my west coast pal Paul discusses how the Chicago School of Economics Circling the Theoretical Drain: “In the current issue of the New Yorker there is an alternatively depressing and fascinating piece (Letter from Chicago) by John Cassidy about how the Chicago School of economics – monetarism, rational expectations, efficient market…Read More
One of the memes I’ve heard recently in the climate debate is that there is no scientific consensus — that there is actually strong disagreement. The main basis of this argument is that 31,486 dissenting scientists have signed a petition against the belief that Global Warming is man made at the PetitionProject.org. I don’t want…Read More
Economics Nobel laureate and Columbia University professor Joseph E. Stiglitz has what very well be the best year end piece I have seen to date; “The best that can be said for 2009 is that it could have been worse, that we pulled back from the precipice on which we seemed to be perched in…Read More
Invictus is a bulge bracket asset manager with $100+ million AUM. He has no patience for money losers, hacks, partisans pretending to be financial analysts . . . this is the first in a series of critical looks at analysts, media, economists, financial TV. Feel free to share any thoughts in comments. Here’s Invictus: ~~~…Read More
Here is a fascinating twist on the underwater homeowner walking away fromt heir bad purchases: This time, its Morgan Stanley. They spent over $8 billion on commercial property in 2007 — the peak of commercial real estate in the US. Now, they are going to preemptively “Walk Away” from five San Francisco office buildings, letting…Read More
The political buzz today is all about the President’s falling approval ratings. He has now fallen faster than President Bush did (prior to 09/11). The simple solution for the White House: Stop jerking around with Financial Reform. When there is high unemployment, people don’t want to see bailed out bankers making a killing. Fix what…Read More