Author Topic: crystal balls  (Read 9330 times)

sol

  • Walrus Stache
  • *******
  • Posts: 8492
  • Age: 42
  • Location: Pacific Northwest
crystal balls
« on: February 25, 2015, 08:07:36 PM »
I read too much garbage news.

Some of it is entertaining, though  This little gem is confidently predicting a 50% market correction in 2016:  http://www.marketwatch.com/story/stock-market-crash-of-2016-the-countdown-begins-2015-02-25?mod=MW_story_recommended_default

Which says, in part...
Quote
around the presidential election or soon after, the market bubble will burst, as bubbles always do, and will revert to its trend value, around half of its peak or worse.

Any other good examples of fortune tellers you'd like to share?  I think there's value in building a repository of predictions about future market returns to help convince future MMM acolytes about the value of such things.

goodrookie

  • 5 O'Clock Shadow
  • *
  • Posts: 62
Re: crystal balls
« Reply #1 on: February 25, 2015, 10:08:22 PM »
This is extreme but there certainly will smaller corrections to bring SPY closer to 200. The velocity of rise in recent weeks has been too much.

johnny847

  • Magnum Stache
  • ******
  • Posts: 3196
    • My Blog
Re: crystal balls
« Reply #2 on: February 25, 2015, 10:21:51 PM »
This is extreme but there certainly will smaller corrections to bring SPY closer to 200. The velocity of rise in recent weeks has been too much.
Ironic on how a thread started on the premise that predicting future market returns is a fruitless exercise, the very first reply predicts future market returns.

iamlindoro

  • Handlebar Stache
  • *****
  • Posts: 1520
    • The Earth Awaits
Re: crystal balls
« Reply #3 on: February 25, 2015, 10:23:08 PM »
I sure hope it does correct 50% this year!  I'm on track to put in more than I ever have this year!

samuck

  • 5 O'Clock Shadow
  • *
  • Posts: 51
Re: crystal balls
« Reply #4 on: February 26, 2015, 12:10:50 AM »
These predictions are a waste of time, entertaining at best. The same was said for 2012, 2013 and last year. Never happened. I made my monthly investment just yesterday. What's there to be afraid of when you invest regularly and over a long time? And if there is a crash, just ride it out.

dragoncar

  • Walrus Stache
  • *******
  • Posts: 8774
  • Registered member
Re: crystal balls
« Reply #5 on: February 26, 2015, 01:43:37 AM »
These predictions are a waste of time, entertaining at best. The same was said for 2012, 2013 and last year. Never happened. I made my monthly investment just yesterday. What's there to be afraid of when you invest regularly and over a long time? And if there is a crash, just ride it out.

But this one uses simple math!  Crash of 2000.  Crash of 2008.  Crash of XXXX.  Fill in the blanks.

Mighty-Dollar

  • Bristles
  • ***
  • Posts: 377
Re: crystal balls
« Reply #6 on: February 26, 2015, 03:58:38 AM »
These predictions happen constantly. 50% market corrections are RARE historically. We had one in 2007 - 2009 as well as in 2000 - 2002 of 49%. Will we have a THIRD one in only 16 years? Is the stock market ever allowed to go up or is it supposed to go sideways forever? Sounds like this author is suffering from recency bias!

I read about lesser predictions constantly on Yahoo, Market Watch and everywhere else... eminent 10%, 20%, 25% correction, etc.  Constantly! Usually it's after the market drops like 5% and then some idiot will claim that THIS IT IT! They are almost always wrong.

Peter Lynch always said to ignore the noise.
« Last Edit: February 26, 2015, 04:00:30 AM by Mighty-Dollar »

hodedofome

  • Handlebar Stache
  • *****
  • Posts: 1211
  • Age: 39
  • Location: Texas
Re: crystal balls
« Reply #7 on: February 26, 2015, 07:45:53 AM »
Even George Soros, who has perhaps the best long-term track record of any big money manager out there, is wrong all the time. He makes predictions and sounds all smart and whatnot, but it's his back, yes his BACK, that tells him what to do. He builds a thesis, puts on a position, and if his back starts hurting, he gets out. His aching back is his internal signal that he's done something wrong, and he corrects it immediately. And he's wrong often.

But I'll jump on this prediction train just because it's fun. Basing off past US market history, we had the big crash in '29 which started a bear market that lasted for over 3 years before it hit rock bottom. It took 25 years (1954) to eclipse the highs of '29 again. It went on a tear, with several 20-30% pullbacks all the way until the late '60s. Starting in the late '60s we had a new, extended bear market with a 50% pullback and much worse on an inflation-adjusted basis. This lasted till the very early '80s (about 15 years) where we had a big bull run until 2000, with the same 20%+ pullbacks along the way. Then in 2000 we started a new extended bear market, with 2 50% pullbacks. It bottomed in 2009 but we didn't eclipse the 2000 highs until 2013, 13 years later.

So, based off past history, we've already eclipsed the highs and 'should' be in the middle of an extended bull market for a 10-20 year period or so. So we 'shouldn't' see another 50% type bear market for a while, but we should expect 20-30% pullbacks along the way (which are scary to experience, BTW). That's IF the future is like the past. And, we're talking about just a few data points here, so it's not like this analysis is statistically significant or anything. This is all just for fun, I certainly don't have any positions based on this information.

johnny847

  • Magnum Stache
  • ******
  • Posts: 3196
    • My Blog
Re: crystal balls
« Reply #8 on: February 26, 2015, 07:55:28 AM »
He makes predictions and sounds all smart and whatnot, but it's his back, yes his BACK, that tells him what to do. He builds a thesis, puts on a position, and if his back starts hurting, he gets out. His aching back is his internal signal that he's done something wrong, and he corrects it immediately. And he's wrong often.
I could hardly believe this...I looked it up and yea, Wikipedia agrees.

It also references me to this gem posted 02/21/2009 http://www.reuters.com/article/2009/02/21/us-financial-soros-idUSTRE51K0A920090221
Quote
Renowned investor George Soros said on Friday the world financial system has effectively disintegrated, adding that there is yet no prospect of a near-term resolution to the crisis.
....
There's no sign that we are anywhere near a bottom.
VTSAX hit bottom 03/06/2009, just a couple weeks after his statement. Between 02/21 and 03/06, there was an 11% drop.

The Beacon

  • Stubble
  • **
  • Posts: 148
    • Financial Freedom Tips
Re: crystal balls
« Reply #9 on: February 26, 2015, 09:47:08 AM »
I ignore anyone's predictions. While short term trading with solid risk control and a systematic approach might work, long term investment should totally avoid timing the market.  It is simply because you can not afford to be wrong in the long run.  One way is to balance your allocations. If you believe the market is a bubble, then have some bonds, say 80 stocks/20 bonds.  So you will still have some ammo when the market tanks.

The market can stay irrational a lot longer than you can stay solvent!  Never try to catch a top or a bottom.

Retire-Canada

  • Walrus Stache
  • *******
  • Posts: 6728
Re: crystal balls
« Reply #10 on: February 26, 2015, 10:57:16 AM »
Same guy said a crash was 99.9% sure in 2014.

**sigh**

http://www.marketwatch.com/story/new-doomsday-poll-999-risk-of-2014-crash-2014-03-15

If he actually knew what was going to happen he'd be so rich he wouldn't waste time writing articles like this and be living large on his private island.

-- Vik

El Marinero

  • Stubble
  • **
  • Posts: 136
  • Location: East Bay
Re: crystal balls
« Reply #11 on: February 26, 2015, 11:14:34 AM »
There is an art to making  predictions.  They need to be big, so that they stand out from the pack.

If I predict the market will be up about 7% in 2015, that may be right, but it is not 'news',  Just not dramatic enough.  That''s why I predict the market will be up exactly 32.4% in 2015.  If that actually happens,  I'll be able to claim that I am an astounding financial whiz.

The other part is to add a bit of weasel language so that failed predictions can be dismissed.   

Eric

  • Magnum Stache
  • ******
  • Posts: 4061
  • Location: On my bike
Re: crystal balls
« Reply #12 on: February 26, 2015, 11:41:44 AM »
Can't help you out here Sol, as I have been blessed with brass instead of crystal.  :)

skyrefuge

  • Handlebar Stache
  • *****
  • Posts: 1007
  • Location: Suburban Chicago, IL
Re: crystal balls
« Reply #13 on: February 26, 2015, 01:12:34 PM »
Let's go to our very own smedleyb, the MMM forum's beloved activist trader:

------------------------------------------------------------------

June 2, 2012: S&P500 stood at 1278, its lowest value in 6 months, following a 9% drop in the previous month. He said:

"The massive sell-off in our markets on Friday -- and their failure to muster any sort of bounce into the close while trading below the important technical level of 1284 (200 day moving average) -- suggests to this seasoned market watcher that the potential exists for an epic sell off which will cut deeper and sink faster than anyone can imagine.  Yeah, yeah, it's impossible to time the market, etc.  I get it.  But let's not ignore what's before our eyes: this market is deteriorating quickly, and unless Europe produces its own fiscal bazooka soon, the worst may be still yet to come.  And I mean bad worst.

I say ready your cash and prepare to strike.
"

The next day, the index went up, and since then, it has never returned to that 1278 level, or anything even close to it. It currently stands at 2111. If you had followed that advice to "ready your cash", you would have sold at a 6-month low, and never had a chance to buy back in. The ability to hit the timing that perfectly wrong is remarkable!



------------------------------------------------------------------

June 11, 2012: Nine days later, S&P500 had risen to 1326, but, while dropping in his hedges as always, he wasn't ready to give up his prediction:

"this was hardly the financial bazooka the markets have been looking for.  The chance remains that today was a fakeout move and Europe could ignite to the upside over the next week -- but today's reaction does not support that possibility, and the onus falls again on the bulls to prove that the Spanish bailout is the beginning of something significant and not a belated act of desperation by the EU."

------------------------------------------------------------------

July 31, 2012: 7 weeks later, he sort of admitted he was wrong.

"It appears Europe did indeed enter a period of calm following the early June dip as most Euro indices are up anywhere from 5-10% over that time."

Wise for once, he had no strong predictions either way. Oh, except to promise volatility:

"It's put up or shut up time for Europe as the health and stability of global stock and debt markets hang in the balance.

Hold on to your hats because this week promises to be a bumpy ride.
"

S&P500 values for the week:

1385
1379 -0.4%
1375 -0.3%
1365 -0.2%
1391 +1.2%

Up 0.4% for the week. Even the most ephemeral, floppy hat would have stayed on your head in those mild breezes.

------------------------------------------------------------------

Oh wait, later the same day, he did make a more-concrete prediction:

"My plan is to short any spike up to 1400 over the next couple days (via Oct Spy puts)"

The S&P500 did indeed break above 1400 seven days later. And then it did drop back below that level! For two weeks. In November. Whoops. And of course it has never returned to that level again.

------------------------------------------------------------------

November 29, 2012: S&P500 at 1410, after a 4.2% rise over the previous two weeks.

"That said, shorting the QQQ's in size this morning (66.07).  File this rally under "too far too fast."

Yeah, I know this broken record is getting old, you know what comes next. S&P500 never dropped below 1410 again.

------------------------------------------------------------------

December 18, 2012: Just to show I'm not cherry picking, on this day, Ford was at $11.67.

"I've accumulated a not insignificant amount of Ford shares the past two days.  Stock has recently broken out of 2 year down trend, and the credit fundamentals at the company are the best they've been in years (suggesting cheaper borrowing costs going forward).  Throw in the hot-looking Fusion and a revamped Lincoln line, I think $15 is in the bag over the next couple of months.  Setting sell stops under the $10.50-$11.00 range just in case I'm wrong, which I often am."

Ford has never again dropped below that level, so he got one right. Well, assuming he could hold on until May 2012, when it finally hit $15 (a much longer wait than his hoped-for "couple of months").

------------------------------------------------------------------

December 28, 2012: Ten days later.

"Selling entire F position at 12.76"

LOL.

------------------------------------------------------------------
« Last Edit: February 26, 2015, 08:43:10 PM by skyrefuge »

MrMoogle

  • Handlebar Stache
  • *****
  • Posts: 1116
  • Age: 34
  • Location: Huntsville, AL
Re: crystal balls
« Reply #14 on: February 26, 2015, 01:50:55 PM »
Same guy said a crash was 99.9% sure in 2014.

**sigh**

http://www.marketwatch.com/story/new-doomsday-poll-999-risk-of-2014-crash-2014-03-15

If he actually knew what was going to happen he'd be so rich he wouldn't waste time writing articles like this and be living large on his private island.

-- Vik

Well his prediction would have come true, if everyone didn't read his article and adjust their portfolios accordingly :P

Mississippi Mudstache

  • Handlebar Stache
  • *****
  • Posts: 2161
  • Age: 35
  • Location: Danielsville, GA
    • A Riving Home - Ramblings of a Recusant Woodworker
Re: crystal balls
« Reply #15 on: February 26, 2015, 07:17:02 PM »
Let's go to our very own smedleyb, the MMM forum's beloved activist trader:

------------------------------------------------------------------

June 2, 2012: S&P500 stood at 1278, its lowest value in 6 months, following a 9% drop in the previous month. He said:

"The massive sell-off in our markets on Friday -- and their failure to muster any sort of bounce into the close while trading below the important technical level of 1284 (200 day moving average) -- suggests to this seasoned market watcher that the potential exists for an epic sell off which will cut deeper and sink faster than anyone can imagine.  Yeah, yeah, it's impossible to time the market, etc.  I get it.  But let's not ignore what's before our eyes: this market is deteriorating quickly, and unless Europe produces its own fiscal bazooka soon, the worst may be still yet to come.  And I mean bad worst.

I say ready your cash and prepare to strike.
"

The next day, the index went up, and since then, it has never returned to that 1278 level, or anything even close to it. It currently stands at 2111. If you had followed that advice to "ready your cash", you would have sold at a 6-month low, and never had a chance to buy back in. The ability to hit the timing that perfectly wrong is remarkable!



------------------------------------------------------------------

June 11, 2012: Nine days later, S&P500 had risen to 1326, but, while dropping in his hedges as always, he wasn't read to give up his prediction:

"this was hardly the financial bazooka the markets have been looking for.  The chance remains that today was a fakeout move and Europe could ignite to the upside over the next week -- but today's reaction does not support that possibility, and the onus falls again on the bulls to prove that the Spanish bailout is the beginning of something significant and not a belated act of desperation by the EU."

------------------------------------------------------------------

July 31, 2012: 7 weeks later, he sort of admitted he was wrong.

"It appears Europe did indeed enter a period of calm following the early June dip as most Euro indices are up anywhere from 5-10% over that time."

Wise for once, he had no strong predictions either way. Oh, except to promise volatility:

"It's put up or shut up time for Europe as the health and stability of global stock and debt markets hang in the balance.

Hold on to your hats because this week promises to be a bumpy ride.
"

S&P500 values for the week:

1385
1379 -0.4%
1375 -0.3%
1365 -0.2%
1391 +1.2%

Up 0.4% for the week. Even the most ephemeral, floppy hat would have stayed on your head in those mild breezes.

------------------------------------------------------------------

Oh wait, later the same day, he did make a more-concrete prediction:

"My plan is to short any spike up to 1400 over the next couple days (via Oct Spy puts)"

The S&P500 did indeed break above 1400 seven days later. And then it did drop back below that level! For two weeks. In November. Whoops. And of course it has never returned to that level again.

------------------------------------------------------------------

November 29, 2012: S&P500 at 1410, after a 4.2% rise over the previous two weeks.

"That said, shorting the QQQ's in size this morning (66.07).  File this rally under "too far too fast."

Yeah, I know this broken record is getting old, you know what comes next. S&P500 never dropped below 1410 again.

------------------------------------------------------------------

December 18, 2012: Just to show I'm not cherry picking, on this day, Ford was at $11.67.

"I've accumulated a not insignificant amount of Ford shares the past two days.  Stock has recently broken out of 2 year down trend, and the credit fundamentals at the company are the best they've been in years (suggesting cheaper borrowing costs going forward).  Throw in the hot-looking Fusion and a revamped Lincoln line, I think $15 is in the bag over the next couple of months.  Setting sell stops under the $10.50-$11.00 range just in case I'm wrong, which I often am."

Ford has never again dropped below that level, so he got one right. Well, assuming he could hold on until May 2012, when it finally hit $15 (a much longer wait than his hoped-for "couple of months").

------------------------------------------------------------------

December 28, 2012: Ten days later.

"Selling entire F position at 12.76"

LOL.

------------------------------------------------------------------

Wow, that was epic. I'm glad my active trading days only lasted a few months when my portfolio was only about $10,000. I came out just fine, thanks to a lucky guess on Staples when the price was under $11, but I'm happy that I no longer have to think about it more than twice a year. 

Middlesbrough

  • Bristles
  • ***
  • Posts: 268
Re: crystal balls
« Reply #16 on: February 26, 2015, 07:23:18 PM »
If I remember correctly the market was supposed to correct in 2014. 2015 must be it for sure then! :)

gimp

  • Handlebar Stache
  • *****
  • Posts: 2348
Re: crystal balls
« Reply #17 on: February 26, 2015, 08:30:12 PM »
Dude, that post... fucking owned.

In other news, 2015 is the year of linux on the desktop a stock market crash.

johnny847

  • Magnum Stache
  • ******
  • Posts: 3196
    • My Blog
Re: crystal balls
« Reply #18 on: February 26, 2015, 08:39:04 PM »
Just for the hell of it I'm going to predict the S&P 500 will close at 2315.42. My crystal ball gave me five options. I liked this one the best.

Let's see if I remember this thread at the end of the year

josstache

  • 5 O'Clock Shadow
  • *
  • Posts: 99
Re: crystal balls
« Reply #19 on: February 27, 2015, 07:22:41 AM »
If he actually knew what was going to happen he'd be so rich he wouldn't waste time writing articles like this and be living large on his private island.

I looked into islands a while ago and discovered they are shockingly cheap, far cheaper than land in most urban areas in US and Canada. This was for undeveloped islands though. Building infrastructure might make it more pricy, but seemingly still not only the domain of the super rich.

Here's an island in Maine for $40,000: http://www.privateislandsonline.com/islands/chandler-island

Just to pull a figure out of a hat, I bet you could develop that island to a reasonable state for under $500,000, making the land and development combined cheaper than a house in many urban areas.

Well yeah, but who wants that kind of plebe island?  Larry Ellison set the mark to beat: http://en.wikipedia.org/wiki/Lanai

Scandium

  • Handlebar Stache
  • *****
  • Posts: 2223
  • Location: EastCoast
Re: crystal balls
« Reply #20 on: February 27, 2015, 08:08:39 AM »
Let's go to our very own smedleyb, the MMM forum's beloved activist trader:

------------------------------------------------------------------


------------------------------------------------------------------

That was fantastic. Please make this a monthly feature!

Heckler

  • Handlebar Stache
  • *****
  • Posts: 1346
Re: crystal balls
« Reply #21 on: February 27, 2015, 08:45:18 AM »
Isn't preparing for a crash the cause of a crash? 

trailrated

  • Handlebar Stache
  • *****
  • Posts: 1136
  • Age: 32
  • Location: Bay Area Ca
  • a smooth sea never made a skilled sailor
Re: crystal balls
« Reply #22 on: February 27, 2015, 08:59:52 AM »
Let's go to our very own smedleyb, the MMM forum's beloved activist trader:

------------------------------------------------------------------


------------------------------------------------------------------

That was fantastic. Please make this a monthly feature!

+1 best post ever

hodedofome

  • Handlebar Stache
  • *****
  • Posts: 1211
  • Age: 39
  • Location: Texas
Re: crystal balls
« Reply #23 on: February 27, 2015, 09:12:14 AM »
Let's go to our very own smedleyb, the MMM forum's beloved activist trader:

------------------------------------------------------------------

------------------------------------------------------------------

Ok, I'll come to a little defense of this guy (I have no idea who he is BTW).

This is a great post and shows the futility of predictions on the average. No matter how good we are, there are just too many variables in worldwide markets to make better than random guesses at what is going to happen in the future. However, I'd like to make a few points:

1) An opinion is not a position. An investor can have plenty of opinions, and absolutely no positions based on those opinions. This is a huge deal that most people don't understand. When a guy gets on tv or writes an article, I'll bet less than 10% of those opinions are backed up by a position. FOLLOW THE MONEY. When a guy has a position on, he is then putting his money where his mouth is.

2) The future is unpredictable and anything can happen. However, we don't have to know what's going to happen in the future in order to make money.

3) It doesn't matter how many times we are right or wrong on our positions. What matters more, is how much money we make when we're right, and how much we lose when we're wrong. George Soros made his money off of a few, very large wins, and kept his losses as small as possible. Buffett is the same. Look at most of the good investors out there, and you'll see this is consistent.

4) Following anyone else's predictions/analysis/strategy is a great way to lose money. You'll never be able to make any money without doing your own analysis and following your own strategy. It may be ok to get ideas from someone else, but only if those ideas work within your methodology. Ken Fischer gave his dad, Philip Fischer (guy who wrote Common Stocks and Uncommon Profits and was very influential to Buffett), investing ideas his whole life. His dad only took a few of them. Ken was frustrated by this but his dad would only take the ideas that fit within the system he used for himself to pick stocks. Graham was the same way when Buffett worked for him. 

I've followed Peter Brandt's blog for years. He is an individual trader who has done 40%/yr for over 30 years on his own. I can't tell you how many posts he's put out there of "corn is about to take off!" or "small caps could drop a quick 15% if this happens!" And it's all a bunch of baloney. It hardly ever happens. He's right only about 30% of the time. 30%! BUT...when he's right, he makes a ton of money, and when he's wrong, he may only lose about .3% of his account. Risk management and intelligent position sizing is the lifeblood of good active investing. Without it, you are doomed. Peter will tell you, "I did 30 trades last year, and only about 10 were winners. Of those, only about 5 were instrumental to my performance. I can guarantee you that I can't predict which 5 trades are going to be the big winners in advance. So I have to do the 20 losers and 5 marginal winners before I can find the 5 big winners. I just have to accept the losers as a cost of doing business, and understand that the big winners will come if I just stay patient and consistent."

« Last Edit: February 27, 2015, 09:17:20 AM by hodedofome »

trailrated

  • Handlebar Stache
  • *****
  • Posts: 1136
  • Age: 32
  • Location: Bay Area Ca
  • a smooth sea never made a skilled sailor
Re: crystal balls
« Reply #24 on: February 27, 2015, 12:14:09 PM »
Let's go to our very own smedleyb, the MMM forum's beloved activist trader:

------------------------------------------------------------------

------------------------------------------------------------------

I've followed Peter Brandt's blog for years. He is an individual trader who has done 40%/yr for over 30 years on his own.

If 30 years ago he invested $1,000 and never put in another dime, compounding at 40% per year he would now have $24,201,432.36

I call bullshit. Please tell me I just did not interpret this correctly.

sol

  • Walrus Stache
  • *******
  • Posts: 8492
  • Age: 42
  • Location: Pacific Northwest
Re: crystal balls
« Reply #25 on: February 27, 2015, 12:36:10 PM »
If 30 years ago he invested $1,000 and never put in another dime, compounding at 40% per year he would now have $24,201,432.36

I call bullshit. Please tell me I just did not interpret this correctly.

You're arguing against idiocy with math, so don't expect much in the way of reasoned response.  Try shouting really loudly instead.

That 40 percent claim isn't calculated in any way that you would recognize.  It ignores most losses, and it extrapolates short term gains into annualized returns instead of, you know, using the actual annual return. 

Some apologists have also claimed that he made regular withdrawals every year of his gains and spent them, which is why he is not now sole owner of the US economy.

vehementi

  • 5 O'Clock Shadow
  • *
  • Posts: 6
Re: crystal balls
« Reply #26 on: February 28, 2015, 12:42:00 AM »
which is why he is not now sole owner of the US economy.

Oh man if only he hadn't bought all those things each year!  Bet he's kicking himself now.

happy

  • Walrus Stache
  • *******
  • Posts: 5312
  • Location: NSW Australia
Re: crystal balls
« Reply #27 on: February 28, 2015, 04:40:44 AM »
Smedleyb, Brewer, Jamesfq….where art thou now? The place just isn't the same now.

hodedofome

  • Handlebar Stache
  • *****
  • Posts: 1211
  • Age: 39
  • Location: Texas
Re: crystal balls
« Reply #28 on: February 28, 2015, 07:39:44 PM »

If 30 years ago he invested $1,000 and never put in another dime, compounding at 40% per year he would now have $24,201,432.36

I call bullshit. Please tell me I just did not interpret this correctly.

You're arguing against idiocy with math, so don't expect much in the way of reasoned response.  Try shouting really loudly instead.

That 40 percent claim isn't calculated in any way that you would recognize.  It ignores most losses, and it extrapolates short term gains into annualized returns instead of, you know, using the actual annual return. 

Some apologists have also claimed that he made regular withdrawals every year of his gains and spent them, which is why he is not now sole owner of the US economy.

Yeah you really don't know how a proprietary full-time trading operation works. All you had to do was a few google searches to find out if I was full of it or not. Peter's audited performance is in his book and on the web.

Bob W

  • Magnum Stache
  • ******
  • Posts: 2947
  • Age: 60
  • Location: Missouri
  • Live on minimum wage, earn on maximum
Re: crystal balls
« Reply #29 on: March 02, 2015, 01:12:11 PM »
Even George Soros, who has perhaps the best long-term track record of any big money manager out there, is wrong all the time. He makes predictions and sounds all smart and whatnot, but it's his back, yes his BACK, that tells him what to do. He builds a thesis, puts on a position, and if his back starts hurting, he gets out. His aching back is his internal signal that he's done something wrong, and he corrects it immediately. And he's wrong often.

But I'll jump on this prediction train just because it's fun. Basing off past US market history, we had the big crash in '29 which started a bear market that lasted for over 3 years before it hit rock bottom. It took 25 years (1954) to eclipse the highs of '29 again. It went on a tear, with several 20-30% pullbacks all the way until the late '60s. Starting in the late '60s we had a new, extended bear market with a 50% pullback and much worse on an inflation-adjusted basis. This lasted till the very early '80s (about 15 years) where we had a big bull run until 2000, with the same 20%+ pullbacks along the way. Then in 2000 we started a new extended bear market, with 2 50% pullbacks. It bottomed in 2009 but we didn't eclipse the 2000 highs until 2013, 13 years later.

So, based off past history, we've already eclipsed the highs and 'should' be in the middle of an extended bull market for a 10-20 year period or so. So we 'shouldn't' see another 50% type bear market for a while, but we should expect 20-30% pullbacks along the way (which are scary to experience, BTW). That's IF the future is like the past. And, we're talking about just a few data points here, so it's not like this analysis is statistically significant or anything. This is all just for fun, I certainly don't have any positions based on this information.

What these generalized market numbers almost always neglect is dividends.  Sure it to 10-25 to get back to where you started but for much of that time period dividends were fantastic compared to inflation.   We are just the opposite now as inflation outpaces dividends.