D’oh! I wish I hadn’t done that

I am sometimes wrong; on occasion, spectacularly so. One of my biggest complaints about the finance industry and the media that cover it is the lack of accountability for errors. Since I spend so much time debunking the foolishness of others, it’s only fair that I hold myself to the same standards of eloquence and accuracy. Hence, the annual mea culpa list.

While some folks find it hard to admit error, I expect to make mistakes. In fact, I even look forward to them. We learn far more from losing than we do from winning.

It helps when mistakes are kept small, manageable and repairable. An error severe enough to send you into bankruptcy may have lessons others may benefit from, while the person who is wiped out may learn too little too late.

Various companies — think Turing Pharmaceuticals, Valeant or Theranos — seem to have missed the lesson on not becoming a textbook case study in mistakes or erroneous decision-making.

An error related to investing, economic analysis or financial matters should be viewed as an opportunity to gain or improve skills, increase understanding and develop hard-won experience. It may be an old quip, but it’s true: “Good decisions come from experience, and experience comes from bad decisions.”

New mistakes show you are expanding your skill set, experimenting — dare I say innovating? — and taking what are, hopefully, prudent risks.

Anytime someone tries to assess (or even describe) a complex system such as finance or economics, mistakes and misjudgments will happen. Rather than ignoring them, learn from them — if only to avoid repeating the same costly mistake.

Here is my list of 2015’s mistakes:

• Refi soon! Last year about this time, with the economy recovering from a terrible run of weather, and employment and gross domestic product ticking higher, I made the following statement: “Low rates are not going to be here forever. If you have any long-term variable debt, most especially a mortgage, now is the time to think about locking in a long-term fixed 15- or 30-year.” “Don’t think of rates as ‘going higher,’ ” I said; think of them as “getting back to normal.” And I repeated it a few times over the year.

At the time, rates on the 10-year bond were between 2 and 2.5 percent. Rates stayed range-bound until this year. They broke below 2 percent, briefly touched 1.65 percent, and now are just under 1.8 percent. Mortgage rates have followed, from about 4 percent on a 30-year, fixed-rate mortgage to 3.87 percent today — now at 10-month lows.

That’s not a huge drop, but it is still lower than where it was when I suggested refinancing your mortgages.

If you have a variable-rate mortgage, you might want to think about locking in rates here. Sure, rates can be squeezed even lower, but the risks remain to the upside. (If I am wrong, look here next year for another rate-based mea culpa).

•  Falling oil prices. About a year ago, I said about low oil prices, “Look for it to lead to an increase in consumer sentiment and spending, greater corporate hiring and bigger capital expenditures later this year.”So far, about half of that has not come true. Yes, corporate hiring has increased — since then, about 2 million new jobs have been created, nearly all in the private sector. However, we have not seen any increase of note in corporate capital expenditure — meaning investing in research and development or in big capital-intensive projects.

Consumer sentiment remains pretty good, but the expected spending that usually goes with buoyant sentiment has been soft. The holiday season was a disappointment.

There is evidence that consumers are using the energy windfall to pay down debt and save more — both positives — but those were pleasant and unanticipated surprises.

Overall, lower energy prices work to put more cash in the hands of consumers. We have seen that happen since the price of energy began sliding in fall 2014. Historically, more cash in consumers’ pockets has been a good thing. However, it has not translated into significantly increased retail sales. Whether this represents a permanent shift in the consumer-spending dynamic or something else entirely is unknown.

• Blood Dimons. Last September, I made what was easily my most significant “journalistic” error of the year: I threw JPMorgan Chase chief executive Jamie Dimon under the bus for a speech he made. Speaking at an event in Detroit, it appeared that Dimon was shrugging off the effect of income inequality, noting that years ago, “People didn’t have iPhones.”

Sounds pretty awful, and I unloaded on him for being so tone deaf. I wrote “Jamie Dimon Reduces Income Inequality” based on published reports of the speech, but I had not read or heard the speech in full.

This, as it turned out, was a big mistake. The speech actually discussed a “range of measures to reduce income inequality including skills training, strengthening inner-city schools, structuring a just immigration policy and growing economic markets.”

Had I read or heard the entire thing, I would have known that. Instead, I relied on an erroneous third party report. This was a big mistake. And I wrote a correction to match.

It was Yom Kippur when Dimon called me, furious at the misquotes, but before he could unload, I apologized to him, told him of the correction, and made it clear this was a one-off. We chatted for 15 minutes or so before he politely moved on.

I am hoping this is a new holiday tradition of getting a phone call from JPMorgan’s chief executive, wishing me a Happy Jewish New Year.

• Don’t feed the trolls! Twitter battles! Comment wars! Email exchanges! If you publish on any sort of a regular basis, you will get feedback, good and bad. However, it’s on you to decide how you respond to the haters.

I like mixing it up, but occasionally I allow the exchanges to go too far. Not every Tweet deserves a full broadside fusillade; nor does every emailer deserve a 500-word response. There are an infinite number of people who will not agree with you; accept that and move on. Even illogical, biased and rhetorically challenged criticisms do not require a missive in return. I try to follow @taylorswift13’s good advice to “shake it off.”

The good news is that I have dramatically stopped my Twitter battles and no longer comment on blogs. Indeed, I hardly ever engage in random Twitter battles. I do occasionally still tweak Chris Christie (@GovChristie) or Kanye West (@kanyewest), but that’s only because they totally deserve it.

Gold at a one-year high. Speaking of feeding the trolls, last year, I said: “Wrong on gold. Just kidding! Every negative thing I wrote about gold last year was totally right. Every. Single. Word.”

Gold was in a defined downtrend. It traded, over the course of 2015, roughly between $1,300 and $1,050. From Jan. 1 to early this month, it exploded upward, from $1,060 to $1,240, an almost 17 percent gain. That is a huge month-and-a-half rally for any asset class.

If you were a trader, and you followed my advice, you missed a fantastic rally. (Of course, you missed it from hundreds of dollars lower than where I first started dissing gold, but that’s a different discussion).

Those were my major mistakes from 2015. Tune in next year for the 2016 version.


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