This week's interview in Barron's was quite a shock as they interviewed Jim Paulsen from Wells Capital after having just featured him on July 20th. Some of the reader comments on the July article ripped into him for being a broken clock but the comments on the current interview seemed to really let him have it and also ripped into Barron's for interviewing him so soon after the last article and for not asking him any difficult questions.The interview was pretty ridiculous. The following quote from the introduction says a lot; "He admits to 'blowing it' by failing to sense the ferocity of the 2008-09 economic and stock-market meltdown. Yet he nailed the rebounds after the tech bust and Sept. 11 attacks. Furthermore, he hung tough after the stock-market meltdown last March, with widely ridiculed predictions that both the economy and markets would come thundering back."
As many readers pointed out he is always bullish. Anyone who is always bullish will appear to have "nailed it" at the low because they were bullish all the way down starting from the top. One reader made an interesting observation that I have no way to vouch for but apparently Paulsen was on Lou Rukeyser late in the tech bubble inflation with very bullish things to say, implying that he missed that bear market in addition to the one in 2008, but this reader felt that the look on Paulsen's face said trouble was coming.
So the reader in question is saying that Paulsen is not dumb but that he is dishonest. Kinder commenters noted that it is his job to be bullish. I've picked on this guy before and recently pointed out that Larry Kudlow seems to believe that patriotism and objective analysis are mutually exclusive. Based on his comments when Arianna Huffington was on the show I think Kudlow said he will not warn of trouble coming ahead of time if he actually saw trouble coming.
When Paulsen is interviewed, and the current Barron's piece was no different, he tends to be ready with statistics that seem to support his perpetually bullish case. Ok, statistics can be used to support any conclusion. Further, no matter what is going on the world at any time there are current numbers to make a bullish case and a bearish case. I'm not certain what numbers would have supported a bullish argument back when Paulsen was "blowing it" but you can bet he got interviewed plenty and had plenty of numbers that he was misinterpreting one way or another.
Knowing now, based on the reader comment linked above, that he missed two 50% declines in one decade certainly is not a surprise. As I skimmed the current interview I found myself not knowing whether anything he said is correct or not. As opposed to taking in an idea that might be "different" I instead wonder in what manner is he getting that point wrong. This is not meant to be funny, there is really no way to know if any point he makes is correct because of his remarkable ability to be spectacularly wrong.
One hopefully useful point to make (repeat from past posts actually) being permanently bullish or only relying on commentary from permanently bullish people can hurt you far more than being skeptical or relying on skeptical commentary. Most people get some things right and some things wrong and being wrong does not mean all credibility is lost but some people simply get far too much face time in light of providing truly bad analysis. For the life of me, I do not know why Barron's hitches its wagon to this guy or others like him--very disappointing.
6 comments:
I let the market tell me whether to be bulish or not. The 200 dma, applied to a properly diversified portfolio, works just fine. I don't understand why people get their undies in a knot over the pop economists and egomaniacs who blather on about the future. If you have to listen to somebody, listen to Warren Buffett.
I will disagree with anon 6:59
Predicting the future got me mostly out of the market in 2007 and back in the market in late 2008 and early 2009.
That said no one will ever be right all the time and the 200 dma is not a bad backup plan. But while Roger loves the 200 dma to smooth the ride it does not necessarily beat a buy and hold approach.
There are some insightful people that are not perma bulls or bears John Mauldin at www.200wave.com is a must read in my book and you can read his weekly letter free. I would not put money in the hedge funds he touts though as I am not a fan of hedge funds or other black boxes.
SEG
For that matter, it is my unscientific observation that it is difficult to find non-bullish commentary in the mainstream, not just Barron's (CNBC, anyone?).
I had to chuckle at the article where it referred to "near-universal pessimism", obviously the market catalyst over the last 11 months! (sarcasm attempt)
That is why I read different blogs, for an alternative interpretation of the unfolding events taking place. Even if I don't experience the "Eureka" moment, more broad-based information sources keeps me out of trouble (I hope).
Mark from L-Ville
Wake up people. Portfolio managers make their money off fees. Once they hit their critical mass, they really don't care anymore. This dude is getting rich no matter what the markets do. He's just keeping his name in the headlines so the people too lazy to do research will invest with him because they have heard his name before. The guy is a marketer. Too bad you can't sue these guys for malpractice like doctors, lawyers, accountants etc. "Gee, I was wrong, sorry."
Seg, MikeC, RW, and Roger,
I have gone back to some of my indicators and one indicator has not even budged, and is still uptrending. This is an early indicator that has been correct about 90% of the time. This weekend I have put some other indicator to check the validity of the trend and it is still ok.
Anon 11.46 Everyone here is making money. About you. Roger is not saying to invest with him. This blog is about comparing ideas. What is yours? do you have any idea how to trade/invest. Well, let us know. If you do not have one, then there are no free lunches, fishes, of whatever.
Best,
Jeff, from Milan, Italy
Roger-
Are you still holding NARFX for your clients or have you sold that position given their performance? There are many L/S funds out there that would be better (IMO) than that one. Truly awful.
MarkM
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