Tonight’s appearance will be Kudlow & Company, and I am scheduled to be on from 5:30 to 6:00 pm, plus or minus a few minutes. Also appearing: My old pal Barry Hyman, John Augustine of 5th Third Asset Management.
I have to emphasize again:
• I don’t believe in forecasting
• I
don’t know what’s going to happen next year;
• Neither do you, nor does
anyone else, for that matter.
• Bull or Bear are irrelevant labels.
That said, I will be defending why I see "risk rising and opportunities diminishing in the U.S.
This also means that there may be a terrific buying opportunity coming up — for equities, and maybe for for Real Estate, also. But you have to be well positioned to take advantage of it.
Why did you leave The Maxim Group?
“I don’t believe in forecasting.”
I would draw a distinction between forecasts and predictions and suggest you say, “I don’t believe in predictions.”
A forecast should be the output from a model with clear assumptions that can be examined and easily changed by the customer. A prediction is something out of a crystal ball.
Not using forecasts is making decisions with no plans. That’s worse than using a model forecast and understanding what it is.
From a humble forecaster,
Kirk
Next year? This year is good enough for me.
Great stuff in the blog lately, btw.
Broke my rules and watched Kudlow tonight. While there wasn’t much of an opportunity to present a case either way, I firmly believe that in order to drive this pig higher, we need to firmly fix the sentiment once and for all and get valuations to a compelling level. 16-18x ain’t compelling in my estimation. I’m not as aggressive in a downside target but, I surely wouldn’t giggle about it’s silliness as mindless bulls do.
Totally surprised by the nonchalant, almost chiding commentary about your position by the the Fifth Third money manager. I guess he’s never participated in the WWE Smackdown. Some day he will and that nonchalant attitude will cost him millions in profits, clientele assets and his four star rating. Btw, even I could have gotten four stars in the last three years. Five is a different story. But I did get five stars on my second grade reading chart.
I have no crystal ball but those who do not learn from the past are doomed to………….blah blah blah. I’d venture to say the majority of money managers have never bothered to study history pre mid eighties. Otherwise, they would be more cautious. My work still says the bulls are being lathered up to take a skinning. And to take it sooner rather than later. ie, January. Maybe we get a typical rockin rise before it happens but I that just isn’t consistent with what I am seeing.
Btw, Since 1965, during the 1st year of the Presidential Cycle, the NASDAQ has been down 3 times during the last 4 trading days of the year. (Make that 4 times because it just happened again.)
Following those 3 occurrences the 1st 4 trading days of January have always been up. (Make that 4 times because it is happening again.) The month of January has been down 2 out of 3 times and the following year has ALWAYS been down. That would be 2006……………Presidential cycles or four year cycles may be witchcraft but they line up with other technical work to put me into a very defensive position.
So, those who preach the first week of the market sets the trend for the year can stick a sock in it. I’m not listening. Just waxing a little nostalgia for those who don’t think alot about capital preservation as the primary investing tenet.
If it’s coming let’s take our medicine in one big gulp or two and not one of those tortuous grind downs like the mid 70s (74-75?). I can’t see a blow off rally in this. Heck, the Christmas rally never appeared and the run up off the late October basing couldn’t push the Dow through 11K. There’s nothing out there that drives this any higher from these levels. Even the Fed Minutes “guidance” (read:spin) was largely priced into the market already or have we forgotten how the financials took off after the perceived loosening when the Committee first set these rates. Anyhow, I want some stars, three will do, for beating the market with 70% cash, and only gold and healthcare exposure last year. I’m positioned even more defensively now as I’ve hedged the healthcare exposure and am awaiting the inevitable gold correction off these levels. I’m looking to buy at wholesale.
i wonder how political uncertainty will play into the next ‘period of time’ (i hate breaking things into arbitrary time segments). You’ve got Scanlon flipping up to Abramoff, and then there’s DeLay. Regardless of your political bias, Scanlon and Abramoff have pled guilty and are rolling over on as many as they need to, and DeLay is currently under indictment. At the least, the threat is that this would lead to a real contest in this year’s congressional elections. It seems sort of, A: important and B: inevitable. Don’t people blame whoever is in charge when bad things happen to the price of their house?
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I TIVO’d back tonight to see you on Kudlow. You did a great job presenting in the limited time you had and with a host who clearly did not agree and was pushing you along. You were very poised, as usual.
I had two questions that they didn’t get to. Given your feeling about the uncertainty of forecasts, I don’t see how you can pin down the timing the way you do. I’m looking at the Presidential Cycle stuff and it is all bullish in the last quarter — if you buy into that approach.
The other question is the standard: What would change your mind? Is there any evidence during the year — economy or whatever — that you would look for to signal a possible shift?
The computer upgrade cycle is approaching in the fast lane. Billions of new media machines will be purchased. Hand held electronics sales are headed out the roof. The metals indices are showing the demand. The extra good news is that the production keeps coming out the factory door at lower prices.
For many years, I have said that smart investors should be able to see both sides of the story but, you are pushing me on this one. You are talking about a lot of downside and I too have trouble understanding what the potential catalyst would be.
Of course, anything can happen but, I see about as much upside potential as you see down side. A serious question is “Are you making dramatic forecasts just for the attention”? Given that you were not given much time to support your outlook on Kudlow, how about taking the time to outline what is going to cause the big fall?
Another poster said that he thinks “the game right now is to keep the game going”. I agree. And to be doubly cynical about it, I think the game is to keep this thing afloat past the 2006 mid-year elections, and to take our lumps in 2007. But I don’t believe they can pull it off. Something will happen in 2006 that will mandate pricing in risk and then the floor will give way.