Yesterday in a segment on Maria's show Hank Smith from Haverford said "we see no reason why 2013 can't deliver similar returns as 2012." To call this comment stupid wouldn't be going near far enough.
No matter the year there are always reasons as to why the market could go down or otherwise have a bad year. The new year is no exception, there are plenty of top down, bottom up, political and cyclical factors that could cause the year to be a bad one.
That does not mean it will be a bad year, that is not the point of this post. To see no threats (taking him at his word) is to not have any understanding of whatever the current environment is. There has never been a time that there were no threats to equity markets. Conversely there has never been a down year in the modern era where there wasn't some sort of bull case.
The job of a portfolio manager (this includes do-it-yourselfers) is to weigh the positives and the negatives and draw a conclusion about the current environment. I believe I have a little credibility here, I warned of a bear market in December 2007 and I warned of a massive rally in late December, 2008. No one will be correct all of the time of course but in my opinion and chance of reasonable success requires the ability to acknowledge both sides of the argument, realize things cannot always be good or always be bad, assess the probabilities and be on the lookout for indications your conclusions were wrong.
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8 comments:
...so just buy, hold, and rebalance and do something else with your life.
If you are reading a stock market blog 45-60 minutes before the market opens then chances are you are doing more than buying, holding and rebalancing.
"we see no reason why 2013 can't deliver similar returns as 2012."
I think you're misinterpreting his comment. Think about it in a different way. I'll use an example:
"we see no reason why we can't get from Las Vegas to Denver in 3 hours."
If he has a plane ticket in his hand, that statement is reasonable, yes?
It means nothing has happened to make it IMPOSSIBLE, i.e. all flights out of Las Vegas have not been cancelled.
To put the PM's comment another way: "Nothing has happened or likely will happen to make me think it's impossible that 2013 is similar to 2012."
IMO, both sentences are saying the same thing, even if his actual comment may be a little confusing.
Agree with ag. I'm a bit alarmed at the aapl trade; I thought you got in pretty late, too late really. Were you in aapl 2,3,4 years back? I bought at 180, out at 606; did not seem difficult to see the growth coming and also not hard to see it tailing off a bit.
by virtue of our position in IYW (which we've owned for many years) we had a 4% portfolio weight in AAPL. We reduced our IYW position by 50% when the stock was at $675 and we bought the name individually at $573.
Roger,
I'm with the you misinterpreted the comment group. Even if you think your interpretation is spot on I read many, many more stupid comments regularly.
Actually I am very confused about this year, but do not think people who think it could be like last year are crazy. If I had to bet I would bet the early part of the year will be good. Then ..... ?????
this year certainly could turn out to be up in a similar fashion as last year but there are plenty of reasons that threaten such an outcome.
thanks blog
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