Barron’s: Back in the Pool

Regarding the prior post (Barron’s: The Bear’s Back), Jason writes in to remind us that: "Barrons had a bull at the pool, on the Cover a few months ago and almost 2000 points ago too." Then the Bear this week…holy moly…who’s zooming who?"

We noted the article that Jason was referencing back in April: Professional Money Managers Are Bullish. The most interesting part of the survey was that 74% of find managers claimed
to be beating the S&P500. (Perhaps only the outperformers responded).

Regardless, here’s an excerpt:

"AND NOW, FOR SOME GOOD NEWS: THE OTHER SHOE isn’t going to drop. After a winter of discontent marked by massive write-offs on Wall Street and a wilting economy on Main, America’s portfolio managers have declared that the worst is over. More than half of the institutional investors participating in our latest Big Money poll say they’re bullish or very bullish about the prospects for stocks through the end of 2008. Their forecasts suggest they’re even more upbeat about the first half of 2009.

Graphic caption
: More than 55% of pros think stocks are undervalued, and most plan to boost their holdings in coming months. Why financials could rally.

Much has changed since we took the pros’ pulse last October, little for the better. Oil is up, profits are down, credit’s constrained and a major brokerage is kaput. As for stocks, the Dow Jones Industrial Average peaked Oct. 9 at 14,164, only to plummet to 11,740 before regaining enough ground to land at 12,892.

As a result, our Big Money respondents say, bargains now abound. More than 55% of poll participants think the market is undervalued, while just 10% say it’s overvalued. Eighty-seven percent expect to be net buyers in the next three to six months; only 13% intend to sell more shares than they buy."

Buy Stocks! Buy Financials! turned out to be less than fabulous advice . . .

Whoops!  Same author, too. But to be fair, that column was a wrap up of what the professional investors who were surveyed in Barron’s Big Money Poll had to say.

At least this week’s cover piece is co-written by Randall Forsyth, who is no cheerleader and tends to be more skeptical than most.


Professional Money Managers Are Bullish (April 2008)

Back in the Pool

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What's been said:

Discussions found on the web:
  1. hj23 commented on Jul 5

    That is amazing, 2,000 points in 2 months! Do people have such short term memories?

  2. Bob_in_MA commented on Jul 5

    That article used the same kind of half-baked BS Mark Hulbert peddles tirelessly, an unconfirmed claim of out-performance here, a few years of isolated data there, and lo and behold, it’s time to buy!!!

    They even give that idiot space in the NYT.

    I think the bigger question is why does mindless optimism have such appeal among business readers?

  3. John commented on Jul 5

    Alas they do, how else would some people get re-elected. This volte face demonstrates how much value can be placed on a lot of financial journalism these days.

  4. David Buffalo commented on Jul 5

    As a technical trader who does value analysis to back up the swing trades in various time frames from minutes to years, the Barron’s article is further proof that people should read financial press for data and not for opinion.

    The time to buy or sell should be based on your own analysis and a reference model that you have used and has been tested to your satisfaction. Make sure you have stops, targets, and potential hedge and exit strategies in place (and that goes for being long or being short).

    Norman Ralph Augustine is quoted as saying “If stock market experts were so expert, they would be buying stock, not selling advice.”

    The acquisition of the analytical mindset is why long ago I quit watching financial news networks and reading every blog or printed piece of financial literature. Regardless of their source, their topics are designed to gin both greed and fear. Greed and fear sell papers and ads for TV shows. Serious investors and traders are doing all they can to avoid emotionalism in their business activities.

    In the book, “The 4 Hour Workweek”, Timothy Ferris discusses the key concepts of elimination of unfocused work and selective ignorance of mass media. That concept, particularly in the era of the 24-hour news cycle, is a must to be practised by traders and investors. Plan your work and work your plan. To heck with the rest of it (unless the data is useful to your planning and trading strategy).

  5. Mike in Nola commented on Jul 5

    An interesting video from the past over on Calculated Risk. If expectations of DJ below 10,000 are correct, it shows how wise the buy and hold advice and “stocks always beat bonds” advice has fared over the last ten years:

    CNBC Promo March 29, 1999

  6. Jim D commented on Jul 5

    I, for one, am very grateful for pump monkeys pushing financials in specific, and equities in general.

    Without someone else on the other side of the trade, how can a short seller succeed?

  7. me commented on Jul 5

    Even as we read that 51 out of 55 BILLIONAIRES lost money.

  8. Mark E Hoffer commented on Jul 5

    Posted by: David Buffalo | Jul 5, 2008 1:00:08 PM

    with no Bull !~

    I’m under the impression that this applies, as well, beyond ‘Trading’ and into most areas of our lives..

  9. Larry commented on Jul 5

    Back in pool? Are there lifeguards? Or more importantly, adult supervision?

  10. Joe Klein’s conscience commented on Jul 5

    David Buffalo:
    You could also quote Buffett. He thinks all those guys on TV are fools. A smart investor never goes on TV and tells everyone what he is buying. He would just be making things more expensive for himself.

  11. Mike commented on Jul 5

    Its not hard to beat the S&P:

    The $SPX was 1278 the week of January 8, 1999.

    This week it is 1262, a loss of 20 points in the last 9 years 5 months and 20+ days.

  12. Steve Barry commented on Jul 5

    I try to keep things simple…a few years ago I noticed Bill Miller (one of the Billionaires) and Legg Mason owned about 25% of’s total equity. I should have shorted Legg right there, because that is just not something a rational investor would do (even though it turned out right ironically). Sure enough, Legg has tanked and Miller’s 1, 3 and 5 year annualized returns are now worse than 99% of similar funds. That is mind boggling for a former legend. As for Barron’s, they should be getting killed right now for that BUY GM cover a few weeks ago. Being so bearish, I never read a word of that one, so I missed out on the laughs.

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