That must be the slogan over at Bloomberg, judging from the posts from such market seers as Ted Seides, Ben Carlson, and Barry Ritholtz. In “Why I Lost My Bet With Warren Buffett”, Ted “explains” why he lost the bet he made with Warren Buffet ten years ago, a bet that “pitted the returns of five funds of hedge funds against a Standard & Poor’s 500 index fund.”
Now, some of us might think that the bet “suggested”—though of course could not prove—the theory that “experts”—like those manning the hedge funds of Ted’s choice—not only cannot beat the market, they can’t meet the market. But, well, Ted doesn’t like that conclusion. See, what really happened was that market didn’t do what Ted thought it was going to do: “But the S&P 500 defied the odds and rewarded investors with a historically normal 7.1 percent nine-year annualized return.” Apparently, though Ted doesn’t go there, none of the experts managing the five hedge funds he chose expected the S&P to weigh in with a “historically normal” return either—even though some people might think that anticipating the market was, you know, their job.
What else went wrong for Ted? Well, a lot of things. For example, “Comparing hedge funds and the S&P 500 is a little bit like asking which team is better, the Chicago Bulls or the Chicago Bears.” (So why did Ted make the bet? Because he’s stupid?) And then, well, it’s hard to predict the future, and, anyway, most people wouldn’t have done what Warren did, which was to simply hold his investment for the entire ten years and not try to predict the future. And, really, a lot of other things as well. Which only goes to show that Ted, while he may look like a perfect idiot for having made a public bet that more or less proves he doesn’t know what he is talking about and probably shouldn’t be giving investment advice to anyone is really a pretty sharp cookie and Bloomberg should continue paying him to give Bloomberg readers terrible investment advice.
Ben Carlson didn’t treat us to such a spectacular belly flop as Ted, but his “on the one hand, on the other” column “Sure, Stocks Are Overvalued. Now What?” encourages readers to engage in market timing (i.e., predicting the future) by providing a long list of “strategies” while also “explaining” that he can’t tell us which one would work right now. Still, “The trick for investors in this situation is to find a strategy they can stick with no matter what happens in the markets. No one can predict the future, but you can plan how you will react under different scenarios.” In other words, you should invest your money as though you knew what you were doing, even though you know you don’t know what you’re doing. Smart, Ben! Very smart!
Barry Ritholtz gets into the act with “Judging the Staying Power of Record Markets”, touting the crystal ball of one Paul Desmond, whose paper “Identifying Bear Market Bottoms and New Bull Markets” won the prestigious Charles H. Dow award back in 2002:
“Desmond has analyzed every major market top since 1925, looking for consistent warning signs of an approaching bear market. He notes that ‘in virtually every case the warnings appear as a persistent divergence between the S&P 500 making a series of new highs, while market breadth makes a series of lower highs, showing that stocks are consistently dropping out of the bull market.’ This process has lasted anywhere from four months to two years.”
Impressive! Paul must have made billions on the 2008 crash, eh, Barry? Didn’t he? Didn’t he?
At least P. T. Barnum had real elephants.
