Wednesday, August 22, 2012
These two pieces about Niall Ferguson have been brought to my attention by Barry Ritholtz:
Both show that Niall was completely, utterly wrong in his economic predictions. As far back as since 2004, if not much earlier. What can I say? Anybody can make forecasts in sport and economics not paying any penalty. In sport, it's an absolute truth. In economics, not so absolute. If you don't invest/manage your own money, you can say anything you want. But let's see what would happen if Niall followed his own advice:
2004: Niall thinks China is going to stop buying US debt. Logical conclusion: short Treasuries. Result: huge loss of capital.
2009: Niall predicts collapse of US Treasuries market. Logical conclusion: short Treasuries. Result: huge loss of capital.
2011: Niall predicts double-digit inflation for 2010s. Logical conclusion: short Treasuries, corporate bonds and stocks, buy gold. If anybody acted this way, s/he should be bankrupt by now.
My advice to Niall and anybody else making economic forecasts: put your money where your mouth is. And we'll see how it works.
Posted by Alex Filonov at 10:44 AM
Thursday, August 9, 2012
If sentiment was the only indicator, I'd say that this rally has a long way to go. Everybody is telling you to be cautious. Careful out there! is the mantra. There are a lot of unknowns, fundamentals suck, Europe is going to crash etc. Oh well. My answer to it: never let your preconceptions to stay in the way of making money. This rally is making me money, because I'm long a lot of stocks. Yes, some of them under water. It always happen. You always make mistakes. The name of the game is to lose less money on losers than you are making on winners.
Unfortunately, sentiment is not the only indicator. Fortunately, technicals are great too. S&P is over 1380 level of resistance. Nasdaq is over 3000, again. Dow, who cares about Dow nowadays?
There is something to say about fundamentals. True, economy is slowing down. True, China is in trouble, and not only because of Europe. Europe is in crisis, US is barely growing, these are legitimate fundamental concerns. And so far I don't see which way chips will fall.
So, I really don't know when this rally is going to end. It looks different from June and July now. Then, we either had the beginning of the week down and rally on Friday or the week up and Friday drop. Now, it looks like overbought condition is getting worked out as a function of time. We'll see.
I am less bullish now than two weeks ago. But still bullish.
Posted by Alex Filonov at 5:15 PM