Fair enough accusation. Let’s put this into some perspective as to the prior market calls and our positioning that whole year.
We flipped Bearish in January 2004 (Market Flashes Yellow Caution Light) saying, "For those of you who are short: let ‘em ride." That was a major market call — and a good one (no false modesty here).
There were several well timed trading calls after that — buy the March lows,
April sells, May buys, June sells. The next major buy was in July — what I consider my worst call of the year. It was wrong. A solid 2 weeks
too soon, we came within a hair of being stopped out. But the market rallied and saved what would have otherwise been a big whack. Lucky is better than smart.
From that nerve-racking Bullish position, we rode through the election — but overall, the timing in 2004
was darned good.
The major Buy Tech call after the January Sell ’em was memorialized in the WSJ early August (see a pdf here Placing a Wager On the Chip Sector Strategist Sees Tax-Incentives Sunset Picking Up Semiconductors). From August to December, the Semis (SMH) gained a little over 10%.
As late as early December, I was still writing bullish columns. It wasn’t until mid-December that FASB rules, which many believed wouldn’t pass — got my attention.
On 12/16/04, I posted this:
"Stock options are no longer off balance sheet — they are an expense
that must be fully and transparently accounted for . . . and that may
leave a mark on quite a few balance sheets.
If you have been looking for an excuse to dump your Nasdaq issues, the new FASB rules on Stock options is it.
Regardless of your views on this rule, it now makes a slew of
equities much much more pricey. All of your favorite former high flyers
from the 1990s — it turns out that they were never really all that
profitible — assuming they have to expense stock options like they are
supposed to . . ." –FASB: Stock Options Must be Deducted
I even updated that post in March 2005, asking:
UPDATE: March 17,
20042005 9:41 AM
Is it just me, or has no one really grokked the significance of this to tech firms?
That puts the December "Look Out Below" into some perspective — it was coming from a bullish tech posture in August, 8 months after a major avoid.
These calls were far from perfect. But they were not the typical groupthink, and I’d like to think they were better than most.
Note: All the calls are on the blog, for those of you with the
patience to sift through everything. I added alot of the the tags as
time went on, so the trading or markets category may not go back far enough.
You can go to any month on the blog with this link:
And substitute for any date the 4 digit year and 2 digit month where the letters YEAR & MO are.
December 2004 is: http://bigpicture.typepad.com/comments/2004/12/index.html