Posts filed under “UnGuru”

Get Lucky: 5 Years Ago Today

Five years ago today, I made the luckiest market call of my career. A few details and some context first, than an explanation as to why this was so lucky.

In 2005, I knew something was amiss in the global markets. The various metrics we track showed that credit had become a full on bubble, and was manifesting itself in residential housing. We discovered this by looking at such factors as median income to median home prices – at the time it was two going three standard deviations from the norm. Cost of owning versus cost of renting was also flashing warning signals, as was Housing value relative to GDP. Indeed, half of all new jobs being created were Real Estate related. That in itself was a giant red flag. All other signs pointed to a major correction in Housing, despite the denials from pundits

In 2006, I had done a huge analysis as to the fair market value of the Dow Industrials. At the time, the Dow was heading to 12,000, but by my calculations, was worth only 9,800. My expectations was that to reach fair value something was likely to have gone wrong in housing, and that could lead to a 3,000 point panic. My best guess was that Dow 6800 – and that hitting this was more a greater possibility than most traders might bet.

It was just a guess – and an early one at that. But after Housing began to reverse, it was apparent it would spill into the real economy. The stock market stubbornly ignored the collapsing residential real estate market until October 2007 – making that time feel like the longest year in my career. But as equities started rolling over, I began to wonder if my guess might come to pass. And so I made a promise to myself, not to become one of those one-way pundits who got one thing right in their career, and never changed their stripes ever again. There is a laundry list of such one hit wonders, and I vowed not to become one of them.  Continues here

Category: Bad Math, Investing, Markets, UnGuru

Fed is Too Focused on Wealth Effect, Equity Markets

  “When will these guys ever learn that maybe, just maybe, these Fed policies aimed at targeting asset prices at levels above their intrinsic values is probably not in the best interests of the nation?” -Dave Rosenberg, chief economist and strategist at Gluskin, Sheff   Not long ago, I was listening to former Federal Reserve…Read More

Category: Federal Reserve, Philosophy, Really, really bad calls, UnGuru

Professional Forecasters and the June 2013 FOMC Meeting

Preparing for Takeoff? Professional Forecasters and the June 2013 FOMC Meeting Richard Crump, Stefano Eusepi, and Emanuel Moench     Following the June 18-19 Federal Open Market Committee (FOMC) meeting different measures of short-term interest rates increased notably. In the chart below, we plot two such measures: the two-year Treasury yield and the one-year overnight…Read More

Category: Markets, UnGuru

Paul Farrell: Beware of Predictions, Optimism Bias

The following assortment of quotes comes from Paul Farrell   2007-2008 bank credit meltdown — the top nine happy-talking gurus False predictions made before the 2008 subprime credit meltdown: ‘Mad Money’ Jim Cramer: “Bye-bye bear market, say hello to the bull.” Ken Fisher: “This year will end in the plus column … so keep buying.”…Read More

Category: Cognitive Foibles, Really, really bad calls, UnGuru

Muppet Portfolios

One of the funny things about running an asset management shop is that you get to see how other firms assemble portfolios. They range from good to bad to terrible. If they were all that good, we probably are not seeing much of them, for those clients are happy to stay where they are. Hence,…Read More

Category: Investing, UnGuru

Why did God invent economists?

10 reasons why economics is an art, not a science Barry Ritholtz Washington Post, August 9, 2013       “Why did God invent economists?” “To make weathermen feel good about themselves.”   That’s a quip from David Rosenberg, former chief economist at Merrill Lynch who is now working at Gluskin Sheff, the wealth management…Read More

Category: Apprenticed Investor, UnGuru

Word of the Day: SocialBot

  This morning, I get a tweeted at by a guy with over 100,000 twitter followers, but less than 10,000 Tweets. Which coincidentally leads me to today’s WOTD from From wordspy: socialbot n. An automated software program designed to mimic a real person on a social networking site. Also: social bot. Example Citations: Now come…Read More

Category: UnGuru, Web/Tech

Economics is an Art, not a Science

>   My Sunday Washington Post Business Section column is out. This morning, we look at what good economists are to investors. The print version had the full headline What this investor took away from summer camp with the economists while the online version was 10 reasons why economics is an art, not a science. It…Read More

Category: Apprenticed Investor, UnGuru

Kelly Evans Slaps Morgan Stanley’s Adam Parker

Category: Analysts, UnGuru, Video

The Economic Policy Uncertainty Index is Nonsense

Whatever Happened to the Economic Policy Uncertainty Index? Mike Konczal Aug 6, 2013     Jim Tankersley has been doing the Lord’s work by following up on questionable arguments people have made about our current economic weakness being something other than a demand crisis. First, he asked Alberto Alesina about how all that expansionary austerity…Read More

Category: Really, really bad calls, Think Tank, UnGuru