Well now, this is a bit embarrassing.
Early last year I published a bit of satire titled How to be a Stock Market Guru and get on MSNBC. Basically I mocked the idea that anyone can predict the short-term market and laughed at those who claim they can. Just as one of my financial heroes, Louis Rukeyser, used to do on his weekly TV program Wall Street Week.
Every January Rukeyser would have each of his guests predict the market’s high, low and close for the year. I forget his exact line, but after the predictions were in he’d say something like, “…with the understanding that even these exalted experts could be wrong, there you have it.” And he’d wink knowingly into the camera.
Come the following December he’d salute those who’d come closest and chide the goats.
In that post, in his honor and in his lighthearted spirit I decided to do the same, introducing the jlcolllinsnh.com 1st Annual Louis Rukeyser Memorial Market Prediction Contest.
Then, after all this emphasizing of how silly such predictions are, I went and won the damn thing myself. At least on the high and close picks. In fact, my prediction for the high, at 1825, was a scant 24 points/.013% off the actual high of 1849. Doesn’t get much more precise than that.
Now any talking head TV stock market guru who came anywhere close to my level of accuracy would be, modestly of course, loudly attributing it to their remarkable wisdom and bathing in the glory. All the while encouraging the belief that they’ll be able to reliably do it again and you should buy whatever it is they are selling. Most likely the fund they manage or the advice they offer.
Here at jlcollinsnh we strive to be a bit more honest. The truth is, very simply, I got lucky and there is no reason to think my predictions for 2014, provided for your entertainment below, will come anywhere close to duplicating those of 2013.
If there is value to be found on this blog, it isn’t in my short-term market prediction skills, “short-term market prediction skills” being an oxymoron and all. It is in, hopefully, providing some perspective on how the market tends to behave long-term and how to successfully invest in it for that long-term.
OK, enough of that. As promised last year let’s get on with saluting the winners and chiding the goats.
Poor goats. Always on the edge.
We’ll start with me.
In that post last January my predictions for the S&P (which incidentally closed 2012 up around 13% at 1426) in 2013 were:
Dec. 31st, 2013: 1754
The market actually posted these results:
Dec. 31st, 2013: 1848
What’s interesting here is that the low was reached on January 8th, just five trading days into the year. The high was on December 31st. This reflects an increase of about 29.5% in a relentless and almost smoothly straight climb up. I certainly didn’t predict that. Nobody did.
Interestingly VTSAX, the fund I favor for wealth building, was up about 33% for the year. The reason it did better being it holds small cap stocks in addition to the large caps of the S&P 500. Small caps tend to outperform in bull markets and 2013 was certainly a bull. But before you rush out and switch to a small cap fund, be warned they tend to get crushed further in the Bears.
While my predicted close of 1754 fell short, it was still impressively close and good enough to also snag the #1 spot in this year’s contest.
My 1312 low was way too bearish and didn’t even finish in the top three.
So how did my participating readers do? There’s praise to be given and goats a-plenty:
Reader RW was the only person more bullish than I and came within a whisker of beating me with a predicted high of 1875. That’s only 26 point off; very impressive:
Good call there on the high, RW. On the low and the close, not so much.
RW offered no reasons for the numbers but instead said: “Good to see you back safe and sound. Thank God the Mayan’s got it wrong!” The first referred to my end of the year 2012 travels and the second to the widely touted alleged Mayan prediction the world would end in December 2012. Maybe they’d have done better predicting the market.
We’ll touch 1801, won’t drop lower than 1422 and close out the year at 1653.
His high came in at #3, his low at #1 and his close at #2. I’d say that makes him our overall winner! Keep that ball polished Rob!
My pal Shilpan also did well, finishing in the money twice. He said:
I am also bullish on the market.
Dec. 31st, 2013: 1630
His low was good for #2 and his close came in at an admittedly distant #3.
No worries M=B, when it comes to this market predicting stuff none of us really have any idea what we’re doing.
So bearish was Mortgage Mutilator only a number for the low was offered:
My prediction is either stagnate or a drop due to all the issues of the debt you guys have. I reckon this will prompt the government to pull out some new harsh policies that will slow everything down.
I predict about 1400 at the end of this year
Opps. But, as we’ll see, not by far the biggest “opps”. Better luck this year, MM!
The Mad Fientist jumped in first asking:
What are the chances of someone from Vermont actually winning this thing??
Well, with predictions like those MF, not much.
Still, as I said in my introduction to his guest post, this is a guy worth listening to. Just not about where the stock market is going.
Sounds optimistic – but there’s not much room left but to climb upward.
We’ll invite Tom to try to do better this year, but for now we’ll only trust his grape related insights.
The New Mexico Lobo expressed shock at what seemed to be unfounded and rampant optimism run amuck:
What? Only two bears??? In the spirit of Marty Z. here goes…
Close 12/31/13: 1210
I hope that I’m the big loser on this one!
As were we all Mr Lobo!
And you got your wish: The title of biggest loser in our little contest for 2013.
But as your consolation prize you’ve earned your official spot as the Marty Zweig spiritual heir around here. Zweig being the frequent Rukeyser Wall Street Week guest who was always relentlessly and deeply “worried about this market.”
Zwieg was even right once in a while. Maybe one day you will be too.
Before I post my predictions, I would like to request a guest blog spot for a week if my unscientific guesstimate proves to be uncannily accurate. Fair? lol.
That said: 1550 SPX, (by March), 1250 SPX (by September) 1325 SPX by December 31.
Yes, the months too. (I don’t mess around with my market forecasts!)
But jokes aside, the market will definitely be lower by the end of year. And you can take that prediction to the bank (of Greece).
Ah well. What you lacked in accuracy my good Mr. smedleyb, you made up for in confidence! Good thing you had that Lobo guy to keep you out of the dog house.
But while his predictions came up short, smedleyb’s idea of a guest post prize is a definite winner. Since this is my site and I get to make the rules around here, I’m going to declare two winners:
RobDiesel not only took the #1 spot for the low, he nailed #2 for his close and was bullish enough to be over 1800 for his high, good for #3. An in the money sweep and deserving of the win! Well done, Rob!
RW for his extraordinarily bold prediction of 1875 for the high. His was the only one more bullish than mine and it came within a measly two points of snatching victory from my grasp. That deserves a win in my book.
OK, guys, to claim your prize do so in the comments below and let us know what your topic will be. Of course, we’ll all also be anxious to see what you’ll forecast for 2014 so a year from now we can laugh at you for being wrong!
For those of you that were wrong this year, there’s no reason you might not redeem yourself for 2014 if you’ve the courage (foolishness?) to try again. We’ll be waiting to mock you yet again if you fail. Heh.
Don’t feel bad. In all likelihood, you’ll get to mock me too. Here are my 2014 predictions:
Dec. 31st, 2014: 2125
Clearly, I continue to be very bullish, but I don’t expect as strong a gain as 2013 or the same smooth uncorrected rise. I see it continuing its sharp rise into 2014 followed by a 15-20% correction from those new heights before settling into a very handsome gain for the year. Here’s why:
Since the Spring of 2009 we have been on a slow, grinding climb back from the brink. Corporations have cut expenses to the bone and have accumulated formidable amounts of cash. Balance sheets remain exceptionally clean. I expect the pace of recovery to continue to accelerate as the market senses that stock prices will continue to build on the 13%+ increase they posted in 2012 and 2013′s 29.5% increase. A rising market tends to attract capital and continue to climb. At least until it doesn’t.
The correction will be triggered by some bit of unsettling news. Market players will suddenly look around and seeing how far and fast the rise has been they’ll pull back sharply. But it will be short as the stronger positive forces reassert themselves.
Gee, reading that it almost sounds like I know what I’m talking about and really can divine the future. Don’t you believe it. And certainly don’t take any of this too seriously. My crystal ball is just as cloudy as everybody else’s.
I’m certainly not changing my investment allocation and strategy based on any of this nonsense and you shouldn’t either. As Mr. Rukeyser would gleefully point out, past results are no indication of future performance and even I can be wrong. As I’d point out, I most often am. We’ll see come next New Year’s Eve.
But a little bit of nonsense is fun once in a while. If you agree or just think you can do better than those that stepped up to the challenge last year, I invite your participation. Please follow the format I used above, and in the comments section clearly state your call for the 2014 high, low and close along with a few lines as to why. That last will help me in mocking you when you turn out to be wrong and in praising you in the unlikely event you turn out to be right.
Finally, thanks for your readership and support of this blog!
May Your 2014 be Healthy, Prosperous, Free and filled with Joy!
And on your journey remember:
“Everything you want is on the other side of fear.”
Note — January 10, 2014: Contest Closed
With 7 trading days and the first full week of trading done, it makes sense to officially close our little contest to new entries. After all, late entries have an advantage. Theoretically anyways. Mostly we have had a large enough response that it already looks to be a larger chore than I expected tracking all this to determine the year end winners and losers. Ah well. That’s a year from now.
The market closed today at 1842, down from the year end’s 1848. Essentially flat and unexciting. Some believe the first week of January is a predictor of what the year will look like overall. If so, both our Bulls and Bears have got it wrong. We’ll see!