20/20 Hindsight
Posted on January 18, 2011
Filed Under Mutual Funds, Personal Investing, The Economic Scene“You should have seen it coming!”
Of all the things clients have said to me over the years, that one phrase stings most. In particular, I remember when it was said by one woman, a long term client. I was attending a financial conference; my staff had called my cell phone with the message that I need to call her immediately. It was during the heart of the market plunge of 2008. She exhaustively vented her deep frustration, and I could offer no satisfying explanation. (She remains a client.)
Should we have seen it coming? In hindsight, it seems easy. All the warning signs were there. How could we have been so blind-sided?
Easily, it turns out. Last weekend I read an article in The NY Times which began …
“It was such a comforting forecast: By the end of the calendar year, a steady stream of corporate profits would extend the stock market’s long-term rally, raising the Standard & Poor’s 500-stock index by more than 12 percent, plus dividends.
“That was the consensus of Wall Street strategists.
“When? It came at the very beginning of 2008. In January of that year, the future, as seen by the professional soothsayers, was about as rosy as could be. But it was completely wrong.”
The article says too, that “…based on the numbers compiled in a Bloomberg survey at the beginning of that year, not a single analyst had even the slightest inkling of the dire events that were about to transpire.”
Not a single one of the hot shots, the 12-hour-a-day financial wonks, who study the markets incessantly, gave us a hint of the dark days looming ahead.
Weren’t they aware of how CDO’s and credit default swaps and other poorly-understood, esoteric securities were rapidly burgeoning out of control? Didn’t they see the bubble forming in the housing market?
In hindsight, it seems so easy. In real time, it never is.
On whatever day you read this, thousands of countervailing forces will be buffeting the securities markets, causing mutual funds, bonds, and all other investments to fluctuate minute by minute. Trying to assimilate all the available information is a fool’s game. The pros can’t do it. You can’t do it. We don’t try, and we have always been quite upfront about that.
The money you entrust to Weber Asset Management is always invested based on long-term themes, not short term headlines.
Investing via hindsight is so easy. If only it was possible.
http://www.nytimes.com/2011/01/09/your-money/09stra.html?_r=1&nl=your-money&emc=your-moneyema4
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