Tuesday, December 30, 2008
The Peerless Prognosticator of Palm Beach
We have been asked in recent days why we don't join the chorus of investment advisors, CNBC pundits and just plain wise guys offering stock market/investment predictions for the New Year.
Our standard response has been similar to what James Thurber wrote in his introduction to “My Life and Hard Times” (look it up, kids), to the effect that he always carried the uneasy feeling that whatever he was writing had already been done better and more quickly by Robert Benchley (look him up, too).
Robert Benchley was a famous humorist, sort of the Will Farrell of his day—only literate and actually funny. And, in our book, the Robert Benchley of stock market prognostications has to be my old pal, Doug Kass, the so-called “Bear of Boca.”
Doug, who runs money, writes on the stock market and somehow managed to find time to appear on CNBC in years past whenever the hosts needed to find a lonely bear on housing, also publishes a list of predictions every year.
So with Kass on the case, who needs another batch from us?
Sure enough, Sunday night it hit our email: Doug’s fearless predictions for 2009. So fearless, in fact, that the number of predictions runs to twenty in all.
And these are not your Bryon Wien-variety, “The dollar will strengthen and then weaken”-type stuff.
Wien, who pioneered the annual Wall Street prediction phenomenon, tends towards the kind of on-the-one-hand-on-the-other statements employed by Wall Street strategists such as he used to be. Doug, however, minces no words. Whereas last year, for example, Wien (who to his credit accurately predicted recession and credit tightening) foresaw consumer spending being “lackluster” in 2008, Doug predicted a “retailing depression,” quote/unquote.
And Doug’s predictions for 2009 are, as usual, a mix of straightforwardly logical calls quite at variance with the emotional consensus (on housing, for example), along with some out-of-left-field notions, including musings on Madoff that are of such specificity that you wonder what, exactly, Doug has been hearing at temple.
Now, we will not attempt to repeat, refine, or review any of the 2009 predictions. You should read them yourself, as Doug wrote them:
But before you do, we want take issue with one aspect of Doug's new list.
Candor and lack of word-mincing aside, what also distinguishes Doug from other Wall Street “seers” is that Doug always prefaces his new predictions with a no-holds-barred look back at his prior lists. Read carefully from this year's look-back:
Our surprise list for 2008 proved to be our most successful ever, with 60% of last year's "possible improbables" proving to be materially on target. Almost half of the prior year's predicted surprises actually came to pass, up from one-third in 2006 and from 20% in 2005. Nearly of one-half 2004's prognostications proved prescient and about one-third in the first year of our surprises for 2003.
What we want to take issue with is Doug’s note that 60% of the picks from his 2008 list were “materially on target.”
The fact is the 60% that Doug got right, in our view, were so out-there at the time he wrote about them, and turned out to be so dead-on-accurate in the way they unfolded—record market volatility, hedge fund outflow acceleration, job losses, “an unprecedented and abrupt drop in personal consumption expenditures,” not to mention Fed policy, Goldman Sachs miscues, private equity “at a standstill,” the value of the dollar falling and the price of oil breaking above $135—that to say Doug was “materially on target” is like saying Tiger Woods won a golf game last summer before his knee gave out.
If anybody came closer than Doug Kass to getting the guts of the 2008 financial crisis—and much of its ramifications—right, ahead of time, we’d like to know.
Indeed, so variant (to use one of his favorite terms), so out-there, so accurate and so timely were Doug’s 2008 predictions that we here at NotMakingThisUp herewith re-title the so-called “Bear of Boca” with something more appropriate than that one-dimensional sobriquet.
Since Doug’s Florida office is in Palm Beach these days, we’re going for the “Peerless Prognosticator of Palm Beach.”
And while we’re at it, we’ll mention something else. One other unfinished piece of business lurks here.
We think it only right that every guest on CNBC—the money managers and the so-called strategists who smirked, sneered, laughed, snorted, and talked over Doug during his Larry Kudlow appearances for the two or three years that the housing bubble was percolating into a worldwide economic crisis which not one of those prattering princes of positivism got right—ought to say on the air and into the camera, the next time Kudlow has them on, for whatever reason he might want them on, what Abraham Lincoln once wrote to General Ulysses S. Grant after that general's bloody march on Richmond:
“You were right and I was wrong.”
It won’t happen, of course. But that doesn’t mean it shouldn’t.
So, our hat is off to Doug Kass: The Peerless Prognosticator of Palm Beach.
I Am Not Making This Up
© 2008 NotMakingThisUp, LLC
The content contained in this blog represents the opinions of Mr. Matthews.
Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews’ recommendations. This commentary in no way constitutes investment advice. It should never be relied on in making an investment decision, ever. Nor are these comments meant to be a solicitation of business in any way: such inquiries will not be responded to. This content is intended solely for the entertainment of the reader, and the author.
Posted by Jeff Matthews at 8:14 AM