Stock Market Gurus…DON’T EXIST!

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I have to admit, I’ve taken a great deal of pride in the various different calls that we’ve made on the economy and things that are going to be happening around us over our 30 years in business. And you know, we write about it, we talk about it here. One thing that I’ve never claimed that I’ve been able to do is time markets. Here to tell you, stock market gurus, stock picking gurus as they are presented to us.

on so many lovely business programs, they don’t exist. There’s no such thing. It’s kind of a funny column in the Wall Street Journal. How to get rich and famous from a stock market crash. And they’re talking about Michael Burry, who was played by Christian Bale in the big short. Quote here, Sooner or later, a crash is coming and it could be terrific.

A wimpy prediction like that would struggle to go viral in 2023, but it caused a sensation in 1929. Weeks before Black Tuesday, stocks plunged in what would be called the Babson break. America was about to sink into the Great Depression, but newsletter writer Roger Babson would reap fame and fortune from his call, founding a college and even running for president. Few remember, though, that he also—

predicted trouble in 1927 and 1928, and also made a premature recovery call. Every single market correction, crash, sell-off, bottom, whatever it may be, has a guy like Babson. And again, they can dine out for a long time. They are, you make that call. Okay. And you can, you can.

You can parlay that into many dinners and big money. In 1987, Elaine Garzarelli, I don’t know if you remember the name, big curly hair lady, predicted a collapse days before Black Monday. And she actually ended up becoming the best paid strategist on Wall Street for some period of time.

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and she went on to run some really bad performing mutual funds. Yeah. Then you had Robert Prechter predicting a roaring bull market after stocks spent 16 years in the doldrums, but also he predicted crashes that never materialized. And again, there are still pundits out there, and people are still listening to their mostly, mostly lousy.

predictions.

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Anyway, Michael Burry. Michael Burry’s made the news. Again, he got the housing market collapse right. So did we. He actually used his hedge fund, created securities with the major firms and was able to play it and parlay and make a decent chunk of change. Yeah, he was played by Christian Bale in Michael Lewis’s big short movie, which I happen to have a big fan of the movie. I liked it a lot.

But take a look at the last five predictions he’s made. And they’ve been dire predictions about the stocks over the past four to five years. Could be worse in 2008, greatest speculative bubble of all time. If you had just bought an S&P 500 fund rather than listen to Burry, you know, you would have made 34% on your money.

You listen to him, you wouldn’t have done so well. I mean, this past January, he put out a one word tweet, sell, sell. There have been so far, and again, the media loves, they need to create these characters. There have been 264 print media mentions of Burry in the past month alone, past month alone. Again,

He hasn’t gone crazy with the, you know, the put buying that he has. But.

Again, yeah, it’s that, you know, there’s actually the Greek story, Cassandra. Cassandra, just priestess, could tell the future, could tell the future but was cursed because no one would ever believe her predictions. Again, it’s easy. These prophets of doom that they continue to create out on a regular basis, they get a hell of a lot.

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It’s great for TV. It’s great for news. But again, their performance is not so impressive. This is interesting. Numerous studies of expert opinion have shown that pundits are, as a group, as accurate as a coin flip. Some have a special knack for being wrong. An analysis of 68 stock market gurus several years ago. Actually, Prector was dead last.

Again, people who got rich and famous on extreme bets tend to follow up with more extreme bets and their outlier predictions often fail. Again, I have a story about this as well. This was, um, wow, it was probably had to be about, uh, I don’t know, probably 2007, 2008, we get contacted by a firm in Venice, Florida. And the guy wanted us to.

by his firm and we went and met with the guy and something was off with this guy from the get-go and some of the demands he was asking us to do which is ridiculous but then he started bragging started talking about how he had the he was top performing fund in 1987 due to the during the crash and he admitted he said well the only reason why I had a top performing fund and I was touted

Uh, it was because I wasn’t allowed to buy anything yet. I didn’t get clearance from the SCC. So yeah, he was touted out there on his great fund manager that knew what was going on because he was a hundred percent in cash, but he had no choice. But to be a hundred percent in cash. Uh, again, people, what, what I try to explain to you here is that stock market crashes come and go, they happen. Sell-offs happen. And again,

If you don’t have at least a five-year window when it comes to your investments, so you can iron out a major crash, well then you know you probably shouldn’t be in stocks in the first place. But crashes for us have traditionally been the market sell-offs, been one of the greatest opportunities that you can take advantage of. Things go on sale. The world doesn’t end.

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you know, do I look out for, you know, issues when it comes to the overall economy? Were able to predict things here? Absolutely. But that also aids us in obviously picking companies and buying companies that we feel are going to be able to handle whatever type of difficult situation that’s in. It’s that anti-fragile principle that, you know, Nicholas Taleb talks about. You want your portfolio to come out on the other side of any sort of shock or sell-off.

better off than it was actually going in. Watchdog on wallstreet.com.