Hi Guys,
Remember that I do not trust forecasts. I believe that forecasters simply can not forecast, especially in the equity marketplace where emotional reactions are so volatile and unpredictable.
Given that disclaimer, I thought you might be interested in a calamitous equity market forecast recently released by the Harry Dent research organization. Here is a Link to it:
https://pro.dentresearch.com/DOW10/PBNBRA06?h=trueHarry Dent is rather infamous for his frequent outsized market projections, both on the upside, but more often for his disquieting downside panics. He has had some successes, but more failures that he tends to underreport. Like most forecasters, his scoring honesty is questionable.
The Dent research team does do reasonable market research. However, the work overemphasizes the significance of one factor. Much of his conclusions are based on demographics and an average individual's spending curve as a function of age. The curve is nonlinear and bends downward at an advanced age. The Dent methodology has some merit, but doesn't incorporate other factors that contribute to market movement. The public's emotional state is impossible to model. Hence, Dent 's forecasting accuracy is nowhere near perfect. Several of his fund adventures were closed because of poor performance.
I trust you will interpret his work with some caution and skepticism. Yet it is another perspective to toss into the forecasting mix. Some folks believe that averaging the forecasts will improve overall accuracy results. Good luck. I don't follow that practice myself. I mostly ignore forecasts.
Best Regards.
Comments
I started a semi-related Dent thread over on M* the other day ...
http://socialize.morningstar.com/NewSocialize/forums/p/371373/3813177.aspx#3813177
Nick de Peyster
Or permabear Marc Faber.
Unless of course you said what you did because you were trying to rub it in
I'll never understand your persistence with his funds, but don't need to.
Many lessons can be learned by those who look at the fund objectively. He's not dumb - as anyone who reads his weekly commentaries can attest. He had a great record managing private accounts before opening his own funds. And he's not a charlatan. I think he sincerely believes his approach will benefit his investors eventually, As others have noted, Hussman appears very generous, funding some worthy charities.
So what's the problem? (1) Over the long run markets go up. Consistently betting against them is unprofitable. (2) Bull markets typically climb a wall of worry. If they were always logical we'd all be rich. (3) Markets can remain irrational longer than most of us can remain solvent. (4) Hedging costs money and eats into gains (well ... if he had any gains). (5) Trying to time the broad market is fraught with peril. It's easy to get caught leaning the wrong way. (But I think you can occassionally time certain sectors.)
Just a few take-always. So, I'm glad HSGFX and Hussman exist. Almost worth the few bucks I lost with him over the roughly 3 years I owned the fund. And my humble remarks don't close the book here. Hussman will have his day - if he has any investors left by than.
Yes, Hussman's fund and long/short in general will have it's day, but as an investment the scheme is flawed.
Both Dent and Hussman are history to me. I realize that I should keep an open-mind, but their records are both long and spotted with frequently bad forecasts. I learn slowly but I do learn.
From Ecclesiastes 9:11 of the King James Bible: " I returned, and saw under the sun, that the race is not to the swift, nor the battle to the strong, neither yet bread to the wise, nor yet riches to men of understanding, nor yet favour to men of skill; but time and chance happeneth to them all."
A distorted but also an insightful version of that famous passage comes from Damon Runyon: "The race isn't always to the swift, but that's the way to bet".
Over time, both Dent and Hussman have a poor score so I prefer to listen more carefully to guys like Buffett, Munger, and Jim Simons. Their records are imperfect but that's always so when making portfolio investment decisions. Luck always influences a part of the outcomes.
Best Wishes.
If you mean "listen to" to mean read, think about, consider and fact-check what they utter or publish, than I agree with you - though I wouldn't confine my listening to just a select few. I'll listen to any of them - even those I think are way off-base for one reason or another. (I can even tolerate Cramer's jabber occasionally.) BTW: The piece you linked by or about Harry Dent I thought highly emotional and not well supported. (But that doesn't mean his conclusion is wrong.)
If you mean "listen to" to mean make specific investment decisions based on what someone (presumably more knowledgable) says, I'd disagree. Not as eloquent as your Ecclesiastes, but I do believe "God gave us a head for a reason." So I'm not inclined to alter my investment course based on anyone's advice. Case in point: There are several on the board whom I respect greatly that have been very negative on the U.S. markets going back 5 or more years. Anyone who might have sold their equities and moved to all cash based on such prophesies (err ... warnings) would surely regret the move today.
As far as general philosophical advice on investing goes, there are no saints and we all have our favorites. I agree with you on Buffett, but would probably put Sir John Templeton ahead of him as a positive influence on me and how I invest. And though Sir John is long departed, it rather proves the point that good investing advice isn't time-specific as many of the gurus would like us to think.
Regards
Thank you for reading my post, and especially for your fine reply.
By listening to someone, I meant simply exposing myself to their thinking on a subject. We agree that listening to a variety of opinions and interpretations are an important input to good, independent decision making.
Phil Tetlock's research on "Superforecasters" provided evidence that forecasting accuracy and subsequent decision making is improved with inputs from a team of experts. I practice that discipline. I seek diverse assessments, listen carefully, and then make an independent decision. That certainly doesn't always work to my advantage, but it does improve my odds.
I surely did not want to discount my respect for Sir John Templeton by omitting him from my much abbreviated list of market gurus. He is a Titan among Titans. I love his many market maxims. Recall that he said: " Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria. The time of maximum pessimism is the best time to buy, and the time of maximum optimism is the best time to sell".
It's hard to find better generic wisdom. I miss him as do so many other investors. His legacy survives him. Of course, identifying those maximum decision periods is a challenge that not many of us can overcome.
Best Wishes.
What I can tell you is the day I'm completely out of HSGFX, the fund is going to soar. It is a given. It has been written on the lines on my forehead.