Jurgis

To be fair: investing is not a prediction. That's what Hussman tries to say, but then he fails on investing - and probably on predictions too. Or at least investing is not just a prediction. You can be wrong with your predictions (a lot) and yet position yourself so that the outcome of your predictions does not matter (much). Buffett does this when he predicts high inflation for the last 20+ years (I think), but positions himself that his prediction failure does not hurt him at all. That in a sense is the ultimate "margin of safety" or "heads I win, tails I don't lose much". Of course, people abuse these and apply them to situations which are anything but. I still think that separating the predictions out of your investment thesis is useful. And clearly predictions are key if you invest in prediction-heavy targets (such as junior oil&gas E&Ps, for example). Anyway, this is interesting thing to think about.

As one of the few who anticipated both the 2000-2002 and 2007-2009 collapses (and having shifted in 2003 to a constructive outlook in-between), what I thought the film [The Big Short] particularly got right was just how excruciating the wait was before the crisis unfolded, even for those who expected it (see, for example, my November 2007 weekly comment Critical Point). Though I don’t take leveraged positions in credit default swaps, or sell bank stocks short, even refusing to take equity market risk in the later stages of that bubble was excruciating enough. One had to suffer fools parroting things like “being early is the same thing as being wrong” until the collapse demonstrated that, actually no, it’s really not. The 2007-2009 collapse wiped out the entire total return of the S&P 500, in excess of risk-free Treasury bills, all the way back to June 1995. http://www.hussmanfunds.com/wmc/wmc160104.htm LOL. Yes, people rationalize their positions in a lot of ways. This is classic. Edit: Here are the returns of Mr. Great Predictor of Market Collapses: http://www.hussmanfunds.com/theFunds.html Average Annual Total Returns for periods ended 12/31/15 1 Year -8.40% 3 Year -7.84% 5 Year -7.01% 10 Year -3.67% Since Inception (07/24/00) 2.25% I will take SP500 any day of the week.

Since this is all in good fun, let me show the issues with your predictions: 1. S&P 500 falls to slightly below 1,700, and bottoms in the 1,660-1,700 range in the next 6 months. - great, apart from the "bottoms" part. Not clear what you mean by "bottoms". Should the market fall below that, expect a retest of the 1,550 tops of 2000 and 2007 - if this, then that is not a prediction. "retest" is not a prediction. 2. The Canadian dollar although in freefall, bottoms around $0.665 against the USD. This happens in the next 12 months. I'm a Canuck, so I follow CAD-USD closely. - this would be great, but "bottoms around" is not a prediction. This could be fixed by saying that CAD does not go lower than 0.665 against USD in next 12 months. 3. Even if the Federal Reserve raises rates again this year, it reverses course before the end of 2017. - if/then is not a prediction Rates go negative within 3 years, - US rates? Which rates? as all other options are exhausted, and all other developed economies continue to lower their rates creating the importation of deflation in the U.S. The rate declines in other countries fail as well, as deep credit contraction will pressure countries. - this is not a prediction. 4. Gold rises to 1,200 as the fear trade creates a little rally in the yellow metal. - what is time frame? In 2016? However, before the year is done, gold also peaks, and resumes its decline. - this is not a prediction. 5. Oil bottoms this year in the $23-25 range. - What do you mean by "bottoms"? Does it go to below $25? Or are you trying to say "Oil does not go below $23 in 2016"? It does not rally, but just sits there, - this is not a prediction. as the global GDP growth rate falls to the 1% mark. - This is quite imprecise. Let's try to make it more so. "Global GDP growth rate for 2016 is less than 1% based on ... IMF 2016 report? some other stat?" ;)

What thesis? Deflation thesis? Which so far has been wrong? A wrong thesis is something to brag about? You have an interesting world view I must say.

I expect accountability. Show me Brier score way above average, I'll be impressed. Otherwise, no. BTW, to be fair, this also applies to non-macro calls by people. There's a lot of the same issues in stock discussions too. The calls about future are made in a rather vague way, then reinterpreted, then forgotten, then different calls are made without acknowledging that the previous call was wrong, etc. Of course, you could argue that CoBF is just a fun forum to exchange friendly banter and nobody should be precise and accountable. And posters investing results (which are not published anyway) are what matters, so who cares if their calls/arguments/opinions/whatever were wrong. As long as they did well in their portfolios. This makes some sense, but I think we lose some potential of the community. I would prefer to listen to people whose macro/micro/company specific/economy/politics/whatever Brier scores are out there rather than try to remember how many times concrete poster was wrong/vague/etc. To pick on you again: apart from couple of months in Europe (I believe), you have been wrong on deflation so far. So why should your future performance be better? Now, if you made a precise, evaluated calls ( for example, "oil will fall below $40 in 6 months" ) in the past and they were shown to be right, you'd have a good Brier score and your future precise calls might be more interesting. Anyway, just my opinion and all that. Take care.

This is a great example of macro prediction that Tetlock disembowels in "Superforecasting". First of all, no time frame is given. Second, it's all "if this then that maybe" vague pontification. Third, it's not even come true, but the author claims it has. Fourth, if it won't come true, author will say "but I said ifffff". Fifth, it is cherry picked out of a long list of author's prognostications by using Monday morning quarterbacking and selective memory. There is zero accountability for any of the predictions, and zero evaluation of how many of them worked out and how many didn't.

buyside long-only, plain vanilla stock picking (1) start investing with real money (2) blogging about your investments Like Grey512 said, this might be difficult to do while notorious546 is working at sell-side...

Get drunk? Congrats! ;D

Amen. Also most investors should spend less time on CoBF, articles, interviews, Google talks, etc. and more time doing fundamental analysis on real companies. Guilty as charged on both counts. ::)

The first part of the roundtable is pretty much thrashing and tea leave reading very similar to macro threads. If these guys were held accountable for their macro predictions, most of them would be out of jobs long ago. Cudos to Witmer and Gabelli who mostly did not get involved in the talking head seance. The section on stock selections and ideas is more interesting. A bunch of ideas have been mentioned in other places though. BTW, 2015 roundtable picks beat the market significantly if you discard the crazy permabears (Marc Faber and Felix Zulauf). This is surprising, since it's better result than a lot of mutuals, hedgies and overall famous investors. (Edit: 2015 roundtable results are not in the article posted. They are in Barron's though).

Bingo! That's what bothers me a lot with quite a few brand-is-a-moat arguments. You have to be very careful when such argument is used. There are brands that survive and keep up their domination. But it's not assured just because it's a brand and it's successful now (or even for last 5-10-15 years).

Bring your own lawyer too! 8)

Yeah, right: http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/cheap-stocks/ And before you start to sing the "historically high margins" song again - I've heard it, no need, most of these companies don't have historically high margins. Also a lot of them already had declining sales last year, so no, not cycle top. Have fun Jurgis, What do you consider as your investment universe, as a base of your post above? Can you clarify your question? I invest in everything. :) Some preference to high ROE "Buffettology" stocks.

I did not play this PowerBall, but I can explain why I buy season ticket for lottery. It is pretty much a binary distribution play. My work, savings, investments are high input size, low risk (haha, says a guy who invests in stock market), lowish return, lowish (though high compared to average wealth) ultimate pot size. That's one side of the two hump distribution. This all will lead to some reliable income/wealth result in X years. It will not lead to huge (lottery jackpot size) income/wealth, since I don't expect 20%+ yearly compounding. So then there is the lottery ticket - low input size ($90 per year), very high risk (pretty much no chance to win), very high return (jackpot), very high ultimate pot size (jackpot). It makes sense to me to have both of these at completely different ends of spectrum. Now, if I had something in between and/or if my work/savings/investments could build to jackpot size result in X years, I probably would not buy lottery ticket. Also if the cost of the lottery ticket would be high in comparison to my work/savings/investments, I would not buy it either. But now it makes sense. Or a shorter reason: "If you win, jackpot changes your life" (not necessarily for better though, read up on lottery winners' curse). That's also the reason when I go to Vegas, I bet on progressive jackpot machines. Yes, odds are better on blackjack or whatever (I'm sure there are experts here who will tell what's the best game to play in terms of odds). But I am not interested to win $20. I'm interested to lose $20 asap or win the jackpot. BTW, I would be interested if anyone has thoughts if there is something in between the two humps above. I.e. is there a "gamble" where you can have lowish input size, high risk (but lower than lottery), very high return (below jackpot, but still very high), very high ultimate pot size. Ideas? For fun of course. :) I am also serious that I consider my lottery season ticket a voluntary tax. It's like charitable donation to my state coffers. Isn't that a good thing? ;)

Yeah, right: http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/cheap-stocks/ And before you start to sing the "historically high margins" song again - I've heard it, no need, most of these companies don't have historically high margins. Also a lot of them already had declining sales last year, so no, not cycle top. Have fun

LOL. Sneaky reference man. 8) ;D

Just a list that might be interesting during current market drop, no justification, it's all IMO, based on quick scan of my lists, no microcaps, very few international, etc. Some numbers might be old, do your own DD, caveat emptor. I own some, don't own others. MU, TESB.BE, GILD, STX, SFTBY, GS, CF, JPM, COP, PSX, DOV, QCOM, LYB, BAC, DFS, AAPL Less so, but still: HOG, CP, IBM, WDC, WMT, ETN, WFC, AXP, STRZA, UNP, DSW

If bond defaults, you will not be paid $100 tomorrow. This is completely false if you take time into account. If you have a Picasso (not the board member, but the painting ;)), you have a reasonable expectation that its value will increase over time. If you have a house in Manhattan, you have a reasonable expectation that its value will increase over time even if you don't ever rent it. Edit: OK, I agree that price and value are not the same. However, this does not mean that price and value can only differ for income producing asset. As an extreme, if you find an antique for $1 in yard sale, its value does not magically drop to $1. And sure as heck if you are an antique expert, there is a huge MOS if you buy that antique for $1. There are people who make a living from this without much risk if at all. Did you even read my answer where I said that nobody here is buying oil. So if I buy shares of oil company that is trading below net cash per share, is that gonna satisfy your crusade for "intrinsic value" , MOS, etc.? Overall, though, yes, we disagree, nobody forces you to buy oil, oil companies, Zimbabwean treasuries or anything else that you consider to have no intrinsic value. Have fun and good luck.

That's really funny. ;D ;D ;D Good luck

Contradict yourself much in one paragraph? 2008-2009 was 50% drop. So was it a generational event or not?

I've said this on another thread: I buy season tickets for lottery. This is like voluntary tax. 8) IMO, they should give everyone lottery tickets with tax receipts. Would be a great motivation to pay taxes!!! 8)

Depends on which country's treasury this is, no? You seem to insist that there are only AAA+ rated companies and treasuries and they are the only ones which have "intrinsic value" . What if the treasury is issued by Ukraine or Zimbabwe or Palestinian Authority? Does it have "intrinsic value"? Is its "intrinsic value" higher/lower compared to "intrinsic value" of barrel of oil?

Just to be clear: so you are saying that a company that is not cash flow positive has no "intrinsic value" ? Edit: I'll add the following to this: So stocks are also a bad example of "intrinsic value"? I guess I am totally lost of what you are trying to argue. :)

@ni-co: You are twisting my words to get to your intended result. Any "intrinsic" (if you choose to use that term) value of stock or bond is based on your expectations of how the business goes in the future. If you take commodity, equivalent thing would be expectations on the future price of said commodity based on future supply and demand. Are you gonna turn around again and claim that this is somehow different from your "intrinsic value" expectations of a business performance? Anyway this discussion is pointless, since nobody here is investing in oil. People are investing in stocks and bonds of oil companies that you yourself said do have "intrinsic" value. Not that I care what you think. If you don't like investing in commodity companies, nobody's gonna force you to start loving it. Though I find it funny that you see no "intrinsic" value in oil, but apparently you see (non-intrinsic? :P ::) :o ) value in bitcoin.

Not picking on you, but... Nobody will remember to come back and revisit in 3 years. Nobody will actually care either. Most likely you will change your opinion about 5-10 times in those 3 years. (Not that anybody will care about this either). Again - I'm not picking on you - just illustrating that predictions such as yours are pretty worthless. (My predictions if I made them, would be equally worthless BTW). If you want to talk predictions, "Superforecasting" is the only way to handle it. Make prediction, get evaluated against others, then you can actually claim that in 3 years your Brier score is in 10th percentile or something like that. Otherwise, meh. And good luck with your prediction and position. I'd probably hope that you're wrong, but then I'm pretty sure you'll change your position in next 3 months or so (whether crash happens or not), so whatever. ;)