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« Confidence, the Economy, and the Fed Balance Sheet | Main | Some Promising Signs for the Economy and the Equity Market »

July 16, 2009

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Mike C

Jeff,

I appreciate the response, but I think you missed my point given your response. The issue really isn't the particulars of Doug's calls or predictions. The issue is Doug a source of "right information"?

You say:

http://oldprof.typepad.com/a_dash_of_insight/2007/06/doug-kass-the-c.html

We also again note that we find Doug's work extremely valuable, by itself worth the subscription to RealMoney Silver.

I guess my point is that finding the "right information" is to some extent in the eyes of the beholder.

I think the real challenge for individual investors is making sure they are exposed to a variety of views, and then ultimately taking responsibility for whatever decision they make and not blaming it on listening to the "wrong" information or pundit.

oldprof

Mike -- You can make a successful market call without having a lot of details about the reasons. There were many calling bottoms, and Doug got it right.

Making many economic predictions is not so easy. He is also very specific about timing. Doug has been much better on market predictions than he has been on the economy and the consumer.

More generally, no one knows how this is going to play out. Why make multi-year predictions?

But he certainly could be right about a trading range.

Jeff

Mike C

Jeff,

In the past (if I recall correctly), you have cited Doug Kass, and I think generally held him up as a "pundit" worth listening to. I believe you referenced his March 666 bottom call which no doubt was a GREAT CALL.

So I'm curious if you have any thoughts on this piece, and his arguments in this piece:

http://www.thestreet.com/story/10553720/1/kass-updating-the-model-portfolio.html

Is this an example of the "right information" for investors to listen to and act on? :)

oldprof

muckdog -- nice to see you back in action.

The marketing of financial media depends upon creating the impression that the viewer can get rich by watching or reading. Should we be surprised that this distorts the "track record?"

You are right on target.

Please don't provoke me on the Austrian school. Some of the work is excellent and helpful, not unlike what I did in my scholar days. There are a lot of people who have a viewpoint who have latched onto this "credential" since they can use words instead of data. Some of them get on TV all of the time. I actually edited out a lot of comment on this because it was too far from the main point of the article.

As usual, you are right on target.

Jeff

oldprof

Mike C -- Well you are absolutely right. If "debase" is in the message, you know what you are going to see!! LOL

There are plenty of professionals with this opinion. I am not going to do a critique of one person, and I know you do not expect that.

As to being a devil's advocate, I suggest that many more people are listening to this sort of advice than those who are buying stocks.

Here is a question for you: How do you think these debt issues will be resolved?

If you can answer that, you will know what to buy.

Thanks for taking the time for another useful comment.

Jeff

oldprof

Excellent point! Two people with differing time horizons can and should make different decisions.

In these economic articles I am trying to focus on the next six months or so, and a bit of anticipation by the market.

And a great point on how everyone is talking his book --- something to remember.

Jeff

Mike C

Excellent post. Alot of food for thought.

Now to play devil's advocate. Consider this piece:

http://www.tcw.com/cmRoot/Funds/CIOLetters/JGLetter_061509.pdf

This is the CIO of a major investment firm. Not sure this is a market "pundit" pushing an agenda, trying to sell books, etc. but a credentialed professional offering his honest thoughts about the economy and market. Is this "right" information to follow or wrongheaded? Only time will tell

BTW, he uses the word "debase". :)

muckdog

Which is better, economic theory from the Austrian School or from Austrian Schoolgirls?

You know, Dr. Jeff, I'm watching Fast Money after these 8-days of UP UP UP on the Nasdaq, and they're all acting like they're participating 100% of the way. Of course, if they've been 100% long all-day and all-night, they're participating in everything.

I realize they're always excited on Fast Money. But it's just that everyone gets so bullish with their buy calls AFTER the big run. Same thing over and over again.

Cheers.

Patrick

Another excellent post :)

I would just add to "Market Pundits" the fact they many are pushing their position. Everyone on CNBC, e.g., is telling you to do what they have already done (at best).

Another bias is time horizon. If we are trying to rebuild our retirement portfolios, and we have 10-25 years until retirement, that is a completely different time horizon than every "pro" in the financial media. They are probably looking out 3 months (if not 3 days). Therefore, if we are in a sideways market or slightly down market for the month, they will be bearish. But if this is a generational buying opportunity, where stocks bought anytime from 3/1/09 to 12/31/09 will return 12-15% per year (looking back 10-25 years from now), then being bearish, or trying to time short term, is a horrible move long term.

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