Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
Ted, thanks for another fine link. Here's a look back at your Sam Eisenstadt post of July 4 (linked below). Than, the S&P 500 stood at 1374. Eisenstadt forecast a year-end close of 1460, equal to about a 6.25% gain. Last Friday the S&P 500 closed at 1413.58 - up about 2.9% from July 4. Of course, a nice year-end rally could put Eisenstadt nearer the mark.
Dear Hank: I cut my investment teeth many years ago by going to my local library and looking at the Value Line individual stock reports. Sam Eisenstadt was the guiding force behind Value Line. Regards, Ted
Well here we go again as we expose ourselves to the market forecasts for 2013. Good luck if you think these market gurus are especially prescient and gifted soothsayers. They are not.
I do not waste precious time seeking or listening to their forecasts. I suggest you do likewise. Your time should be a highly valued commodity that deserves better exploitation.
William Bernstein beautifully captured the essence of investment forecasting for the individual investor. I’ll crudely paraphrase his insightful summary as follows: “There are three types of investors: (1) those who know they can’t know the future, (2) those who don’t know that they don’t know, and (3) those who know they don’t know, but claim that they do have this ability.”
I suspect most MFO members fall into the first grouping. Likely, many neophyte investors and hyperactive traders populate the second grouping. I propose that a majority of professional investment advisors and gurus collect in the third cohort.
Some in that third category actually believe that they have a special forecasting talent. They are unwittingly wrong. These folks are like Astrology advocates pretending to be scientists. The investment forecasting skill set does not exist in any precise format. Uncertainty rules.
But a significant faction of that third cohort is peopled by folks who deal in financial pornography. These guys know better, but are fueled by financial incentives. They are typically grossly overpaid for their often wealth destroying bad forecasts. They are shameless shills, shysters, and charlatans. Don’t trust their expertise, don’t trust their opinions, and don’t trust them. They will surely erode your wealth if you follow their often self-serving guesstimates that masquerade as scientific projections. What a sad way to make a living.
I have not read the referenced article; I do not intend to do so. Therefore I make no specific judgments about the investment professionals interviewed for that report, or the quality of their estimates. I sincerely hope that they do not fall into the last grouping that I discussed. For all I know they may be disillusioned true believers in their forecasting acumen.
But I propose that it doesn’t matter whatsoever. These market wizards have no more forecasting expertise then any MFO participant. Considering the uncertainties confronting us in 2013, their predictions have about the same merit as our own estimates.
Unfortunately, all of these guesstimates are unreliable. Therefore, one reasonable strategy might be to practice flexible thinking, to keep some reserves, to maintain a long term time horizon if possible, to make minor adjustments only as required, to stay focused, and to stay the course. All of that is within our capabilities given a committed portfolio plan. Trust your own instincts.
As renown economist Paul Samuelson noted: “ It is not easy to get rich in Las Vegas, at Churchill Downs, or at the local Merrill Lynch office.” For most of us, the best portfolio advisor is ourselves.
If you visit enough of these expert forecasts, and plot the assembled predictions, you will generate a completely darkened scatter map that provides no reliable actionable exegesis powers. So don’t waste your own energy on this useless task.
Ted, I agree that Sam Eisenstadt might be a rare exception. I too cut my investing teeth on his Value Line research. But that work mostly concentrated on individual company assessments. His excellent original evaluation techniques did require a rework after many years of success that were followed by some hard failures. I suppose nothing remains constant in the investment universe.
"Well here we go again as we expose ourselves to the market forecasts for 2013. "
Well, yes. People offer their opinions every year for the next year; the way financial media is, people offer their opinions and predictions every day about things macro and micro. It's not that these people can see the future - obviously - but they may have a point or two that may be worth considering (or maybe not.)
Investors can certainly read these, but with a filter - be able to take a point or two (or three) away from what people are saying, and everyone has a favorite economist or two (or three) that they look to. I love reading other people's work on Seekingalpha or other such sites - even if I don't agree with it in the slightest! If you read something and don't agree with it, it's my philosophy that if you continue researching and reading and thinking and formulating opinions on what you read (whether you agree with it or not), you're continuing to exercise the mind.
Yes, time is best spent researching and browsing great, classic written works in finance, but in this day and age, apps like Taptu can allow one to browse through financial sites like Seekingalpha extraordinarily quickly. (Additionally, whoever has a phone or tablet should look at Taptu; it's an exceptionally useful way to collect various news and blog sites in one place.)
I don't think I know everything either and I think one never stops learning in terms of investments. I don't think I know the future, but I can try to look "over the horizon" at what I believe to be large/small trends based on personal experiences, research and other analysis.
"I do not waste precious time seeking or listening to their forecasts. "
Have you ever acted on an investment idea, been inspired to look at a stock or sector or otherwise acted on an investment based in part upon an article or articles?
"But a significant faction of that third cohort is peopled by folks who deal in financial pornography. These guys know better, but are fueled by financial incentives"
Thank you for your thoughtful reaction to my post.
Based on your comments, I suspect we are in substantial agreement.
In part, you said: “ … (I)f you continue researching and reading and thinking and formulating opinions on what you read (whether you agree with it or not), you’re continuing to exercise the mind.”
Indeed a loud YES to that observation. Our compasses are completely aligned on that thought.
I do suspect that you and I would not concur on the amount of time that we are each prepared to commit to the investment decision making process and/or the sources that we would consult for our primary inputs.
I have little patience for casual Internet sources that are more or less ad hoc in construction, non-verifiable, and with a paucity of supporting references and data. Brevity is not a positive attribute in this instance. Far too many Web-based interchanges fall into this category, and are consequently not trustworthy.
So, I tend to rely more heavily on fully documented positions such as those reported in peer reviewed academic research, essay length papers, and carefully crafted books.
I do not automatically discard less formal opinions, I just interpret them more skeptically and worry over the incentives that motivate them. Time is too valuable to waste on junk advice, so prudent judgments to discount that advice quickly is often necessary.
Behavioral studies suggest that this rapid-fire assessment is often made based on an emotional like-or-dislike criteria. Unfortunately this bias does compromise the decision-making process. Detailed, hard data does operate to constrain this wealth destroying tendency. The 4-minute TV interviews, and the short opinions expressed on Internet exchanges reinforce this bad habit. I work to limit my exposure to these debilitating inclinations.
In essence, this answers one of your questions. Wall Street analysts are working for their firms, not for you. They profit, albeit indirectly sometimes, from investor hyperactivity. I do not trust their recommendations. I do not watch CNBC; I do not watch Fox Business; I do not watch Bloomberg. I do make a few exceptions on rare, eventful days.
I do subscribe to the Wall Street Journal. I trusted Jonathan Clements when he wrote financial columns for that paper. I do read some submittals from MFO members. I do read David Snowball’s monthly contribution. So I carefully and judiciously select my basic investment sources. I suspect most MFO participants do likewise.
You also asked if I have acted on advice offered in articles. Yes I have, but I’ve been rewarded with very dubious outcomes. Today, I do so far less frequently than I did so in the distant past. Burn injuries are painful and are remembered for a long time. I am a smarter investor today, than I was in the mid-1950s when I purchased my first stock holding in the Chock-Full-O’Nuts company.
Like you, I too attempt to learn each and every day. Admittedly, some days I’m guilty of some retrograde decisions. I surely am not immune to behavioral financial biases. But like everyone else, I’ll keep on keeping-on.
I read such predictions/outlook macro-conversations with a few pounds of salt. Having satisfied myself already about the funds I've chosen, I do pay attention, for new information. I think we all would be smart to carry around an attitude which will allow us to be shown that we are wrong about a particular thing, or even wrong about our conception of The Big Picture. After having dabbled in stocks years ago and after getting mildly burned, I'm happier with the diversification that owning mutual funds gives me, without agonizing over daily ups and downs, though I enjoy tracking my investments quite a bit and finding out what I can, particularly in here, at MFO. Somehow, my MONEY doesn't seem so vitally important in the face of the murder of so many schoolchildren and their teachers in Newtown, Connecticut. You cannot put a price on our LIVES. May all their names be written in the Book of Life. Newtown is just about 90 minutes by car from me, and over the years, I've been all over Connecticut.
Comments
A good call - and a bold one in the face of pervasive negativism of the time. Just a little perspective.
http://www.mutualfundobserver.com/discuss/index.php?p=/discussion/3438
Regards,
Ted
Well here we go again as we expose ourselves to the market forecasts for 2013. Good luck if you think these market gurus are especially prescient and gifted soothsayers. They are not.
I do not waste precious time seeking or listening to their forecasts. I suggest you do likewise. Your time should be a highly valued commodity that deserves better exploitation.
William Bernstein beautifully captured the essence of investment forecasting for the individual investor. I’ll crudely paraphrase his insightful summary as follows: “There are three types of investors: (1) those who know they can’t know the future, (2) those who don’t know that they don’t know, and (3) those who know they don’t know, but claim that they do have this ability.”
I suspect most MFO members fall into the first grouping. Likely, many neophyte investors and hyperactive traders populate the second grouping. I propose that a majority of professional investment advisors and gurus collect in the third cohort.
Some in that third category actually believe that they have a special forecasting talent. They are unwittingly wrong. These folks are like Astrology advocates pretending to be scientists. The investment forecasting skill set does not exist in any precise format. Uncertainty rules.
But a significant faction of that third cohort is peopled by folks who deal in financial pornography. These guys know better, but are fueled by financial incentives. They are typically grossly overpaid for their often wealth destroying bad forecasts. They are shameless shills, shysters, and charlatans. Don’t trust their expertise, don’t trust their opinions, and don’t trust them. They will surely erode your wealth if you follow their often self-serving guesstimates that masquerade as scientific projections. What a sad way to make a living.
I have not read the referenced article; I do not intend to do so. Therefore I make no specific judgments about the investment professionals interviewed for that report, or the quality of their estimates. I sincerely hope that they do not fall into the last grouping that I discussed. For all I know they may be disillusioned true believers in their forecasting acumen.
But I propose that it doesn’t matter whatsoever. These market wizards have no more forecasting expertise then any MFO participant. Considering the uncertainties confronting us in 2013, their predictions have about the same merit as our own estimates.
Unfortunately, all of these guesstimates are unreliable. Therefore, one reasonable strategy might be to practice flexible thinking, to keep some reserves, to maintain a long term time horizon if possible, to make minor adjustments only as required, to stay focused, and to stay the course. All of that is within our capabilities given a committed portfolio plan. Trust your own instincts.
As renown economist Paul Samuelson noted: “ It is not easy to get rich in Las Vegas, at Churchill Downs, or at the local Merrill Lynch office.” For most of us, the best portfolio advisor is ourselves.
If you visit enough of these expert forecasts, and plot the assembled predictions, you will generate a completely darkened scatter map that provides no reliable actionable exegesis powers. So don’t waste your own energy on this useless task.
Ted, I agree that Sam Eisenstadt might be a rare exception. I too cut my investing teeth on his Value Line research. But that work mostly concentrated on individual company assessments. His excellent original evaluation techniques did require a rework after many years of success that were followed by some hard failures. I suppose nothing remains constant in the investment universe.
Merry Christmas.
Well, yes. People offer their opinions every year for the next year; the way financial media is, people offer their opinions and predictions every day about things macro and micro. It's not that these people can see the future - obviously - but they may have a point or two that may be worth considering (or maybe not.)
Investors can certainly read these, but with a filter - be able to take a point or two (or three) away from what people are saying, and everyone has a favorite economist or two (or three) that they look to. I love reading other people's work on Seekingalpha or other such sites - even if I don't agree with it in the slightest! If you read something and don't agree with it, it's my philosophy that if you continue researching and reading and thinking and formulating opinions on what you read (whether you agree with it or not), you're continuing to exercise the mind.
Yes, time is best spent researching and browsing great, classic written works in finance, but in this day and age, apps like Taptu can allow one to browse through financial sites like Seekingalpha extraordinarily quickly. (Additionally, whoever has a phone or tablet should look at Taptu; it's an exceptionally useful way to collect various news and blog sites in one place.)
I don't think I know everything either and I think one never stops learning in terms of investments. I don't think I know the future, but I can try to look "over the horizon" at what I believe to be large/small trends based on personal experiences, research and other analysis.
"I do not waste precious time seeking or listening to their forecasts. "
Have you ever acted on an investment idea, been inspired to look at a stock or sector or otherwise acted on an investment based in part upon an article or articles?
"But a significant faction of that third cohort is peopled by folks who deal in financial pornography. These guys know better, but are fueled by financial incentives"
You mean, like many WS analysts?
Hi Scott,
Thank you for your thoughtful reaction to my post.
Based on your comments, I suspect we are in substantial agreement.
In part, you said: “ … (I)f you continue researching and reading and thinking and formulating opinions on what you read (whether you agree with it or not), you’re continuing to exercise the mind.”
Indeed a loud YES to that observation. Our compasses are completely aligned on that thought.
I do suspect that you and I would not concur on the amount of time that we are each prepared to commit to the investment decision making process and/or the sources that we would consult for our primary inputs.
I have little patience for casual Internet sources that are more or less ad hoc in construction, non-verifiable, and with a paucity of supporting references and data. Brevity is not a positive attribute in this instance. Far too many Web-based interchanges fall into this category, and are consequently not trustworthy.
So, I tend to rely more heavily on fully documented positions such as those reported in peer reviewed academic research, essay length papers, and carefully crafted books.
I do not automatically discard less formal opinions, I just interpret them more skeptically and worry over the incentives that motivate them. Time is too valuable to waste on junk advice, so prudent judgments to discount that advice quickly is often necessary.
Behavioral studies suggest that this rapid-fire assessment is often made based on an emotional like-or-dislike criteria. Unfortunately this bias does compromise the decision-making process. Detailed, hard data does operate to constrain this wealth destroying tendency. The 4-minute TV interviews, and the short opinions expressed on Internet exchanges reinforce this bad habit. I work to limit my exposure to these debilitating inclinations.
In essence, this answers one of your questions. Wall Street analysts are working for their firms, not for you. They profit, albeit indirectly sometimes, from investor hyperactivity. I do not trust their recommendations. I do not watch CNBC; I do not watch Fox Business; I do not watch Bloomberg. I do make a few exceptions on rare, eventful days.
I do subscribe to the Wall Street Journal. I trusted Jonathan Clements when he wrote financial columns for that paper. I do read some submittals from MFO members. I do read David Snowball’s monthly contribution. So I carefully and judiciously select my basic investment sources. I suspect most MFO participants do likewise.
You also asked if I have acted on advice offered in articles. Yes I have, but I’ve been rewarded with very dubious outcomes. Today, I do so far less frequently than I did so in the distant past. Burn injuries are painful and are remembered for a long time. I am a smarter investor today, than I was in the mid-1950s when I purchased my first stock holding in the Chock-Full-O’Nuts company.
Like you, I too attempt to learn each and every day. Admittedly, some days I’m guilty of some retrograde decisions. I surely am not immune to behavioral financial biases. But like everyone else, I’ll keep on keeping-on.
Best Wishes.