Just about this time two years ago I published a bit of satire titled How to be a Stock Market Guru and get on MSNBC. In it 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 his impeccably credentialed 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 31st he’d salute those few who’d come closest and chide the many goats.
The key thing his program and its parade of guests taught me is that, at any given time, some expert is predicting any possible future that could conceivably happen. Since all bases are covered, someone is bound to be right. When they are, their good luck will be interpreted as wisdom and insight. If their prediction happened to be dramatic enough, it could also lead to fame and fortune. But it is all nonsense.
Sadly, Mr. Rukeyser passed away in 2006 and the current generation of investors is left without his insights and wisdom
But in that post, in his honor and his lighthearted spirit, I introduced 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 2013 high, at 1825, was a scant 24 points off the actual high of 1849. Doesn’t get much more precise than that. Or lucky. But even that wouldn’t have been good enough to win this time.
In the comments last January ~40 of you readers chimed in with your own predictions for 2014. Shortly I’ll share the winners and, of course, chide a few of you goats. So far, no one has equaled my first year feat of winning two of the three categories, although as you’ll see two of our winners came very close.
OK. So how did the market, as measured by the S&P 500, do in 2014 and how close did I come?
S&P 500 2014:
- High: 2091 reached on December 29th
- Low: 1742 reached on February 3rd
- Close: 2059 on December 31st
- High: 2218, off by 127 points
- Low: 1806, off by 64 points
- Close: 2125, off by 66 points
Pretty impressive for a guy who doesn’t believe predicting the market is possible. But not nearly impressive enough to win even one of our categories this year.
So, who among my readers had the audacity to best me at my own game? Turns out there were several, but the best of the best are….
For the High:
Pura Vida Nick took the honors for his prediction of 2084 for the high, missing it by a scant 7 points.
His closing prediction of 2029 was also remarkably close to the actual close of 2059, but not close enough to win.
In his comment, he observed: “My crystal ball simply says I may get lucky, and that’s the only reason I would win anything.” Your becoming humility has served you well, Sir!
For the Low:
The very first commentor last year, Reepekg, takes the low crown with his prediction of 1735, also just 7 points off.
Of course, Reepekg cheated by using owl pellets to help select his winning number:
“I cracked open some owl pellets and divined…”
But then he has a history of using unfair tactics:
“It all started when I won a stock market game run by a major newspaper (beating 5 investment experts) at age 15 by picking companies that most closely resembled the names of girls I dated or had crushes on.”
Even so, he turned out to be way too pessimistic on his high of 1986 and close of 1937. Owl pellets and girls’ names can only take you so far.
For the Close:
We had a three way tie. Each predicting 2050, just nine points off, were RW, Chris K and dude.
RW consulted “…the tea leaves because my crystal ball is a bit cloudy after New Year’s eve.” Unfortunately, those tea leaves didn’t help him on his high of 2180, which was 89 points too optimistic and they led him to expect a “crop failure or a digital breakdown” which he said would drive the market down to 1680. 62 points too low.
RW also has the distinction of coming within a 1-point whisker of beating me for the high in the 2013 contest.
In picking his 2050 winning close number, Chris K said:
“No reason why I picked this other than I think the housing and automobile sales will continue to climb (thus giving everyone much more confidence)…” Indeed both housing and car sales improved, but that didn’t help with Chris’s 2197 high (off 106) or his 1648 low (off 94).
dude actually provided serious analisis for his winning closing prediction of 2050:
“IMF and others have been consistent in their predictions for 3% (or more) growth for the U.S. for 2014. Jobs numbers showing steady improvement. Bringing earnings up will keep P/E ratio in line with prices and make stocks still the place to be. U.S. oil production making us a stronger economy (if at the expense of our environment). Election year means the idiots in Congress will not toy with the economy this year. Obamacare gains traction and actually begins to spur entrepreneurialism as smart people in big companies strike out on their own without worrying about losing their health care. Wall Street will take profits here and there making for a few dips, but overall, the market continues its upward trend.”
He also came within 21 points of the high with his call of 2070. Even his 1680 low, while off by 62, beat my own by 2 points.
At the time, I replied:
“Dude! Your analysis makes such perfect sense your predictions are almost sure to be wrong!”
Turns out I was the one who was wrong. Thanks for spoiling my plans for mocking you this year, dude.
But just to show there are no hard feelings, we’re going to use your High prediction as the tie breaker and declare you the winner in this three way for closing.
Still, that’s the problem with round numbers, guys. If only one of you had showed a little gumption and come in at 2051. We can all learn a lesson from Fat Chance whose closing prediction was 2088.24. Now that’s precise. Wrong, but precise.
Fat Chance also tried to persuade me to end the contest early with his December 26 plea in the comments on last year’s post:
“Can you end the contest 2 days early? I am really, really close…..” How insulting! He didn’t even offer a bribe, so of course not.
How close was he?
- High: 2100, off by only 9 points and off only 2 points from our winner.
- Low: 1830, off a dismal 88.
- Close: 2088, off 29
Well within bribing distance! He did, however, redeem himself with a great movie recommendation: Wolf of Wall Street
OK, enough of that. Let’s get on with chiding the goats!
Poor goats. Always on the edge.
We’ll start with the Big Losers…
Carnac called for a close of 1585, missing it by 474 points for the worst call of all in that category. 1585 was also his call for the low, but fully five people did even more poorly in their lows. In posting his predictions, Carnac said, “Why? No idea…”
No idea, indeed! Still, he redeemed himself somewhat with his call for a high of 2133, only 42 off the mark.
Reekwind was our biggest, and wrongest, pessimist calling for a low of 1311, off the mark by a whopping 431. Thankfully.
He was also way too optimistic, with a 2380 prediction. But, like Fat Chance, his 2100 call for the close almost put him in the winner’s circle.
That’s quite a range and, as he said at the start: “I’m expecting a more volatile year…”
Last year, Rob Diesel was our overall winner. His 2013 high came in at #3, his low at #1 and his close at #2. Very impressive and nobody this year came even close to that overall performance. But this year? This year, not so much…
This year Rob is our biggest, and wrongest, optimist calling for a high of 2613, off the mark by a whopping 522. Wouldda been nice though!
He also posted the second worst performance in the closing category with his 2483 prediction, off by 424. Fortunately, his 1632 low missed by only 110, saving him from a clean sweep in the goats placing. Still, it’s enough to crown Rob our biggest loser!
Better luck in 2015, Rob!
Speaking of last year….
Shilpan came in second for predicting the low and third for the close. Amazingly, as with last year, his low of 1720 is again good enough for second place, off only 22 points. But his high and close, off 149 and 121 respectively, are only mid-pack this year. As he said: “I still have no crystal ball and believe that a monkey can do a better job of picking numbers than I on any given day.”
Not sure, but he might be calling you winners monkeys….
The Mad Fientist proved again this year that you can be a wicked smart financial blogger and still suck at predicting the market. While his high only missed by 61, his low was off by 140 and his close of 1757 missed by 302! I’m sure he is celebrating that mistake on the close with the rest of us.
Year End: 2071
“If this thing doesn’t work this year I’m throwing it out and calling Martha Stewart.”
Mmmm. Missed by 34, 71 and 12. Not good enough to win in this very competitive year, but impressive none-the-less. Martha Stewart couldn’t have done any better. (And if you think you can, Martha, give it a try this year!)
The New Mexico Lobo expressed shock last year at what seemed to be unfounded and rampant optimism run amuck. His pessimistic predictions went on to earn him the title of biggest loser in the 2013 contest.
Posting under a new name, “George Hahn,” this year he said, ‘I hope that I can hold on to my coveted crown!!” and went on to predict:
- High: 2032
- Low: 1478
- Close: 1663
Off by 59, 264 and 396. You’re still a big loser, Mr. Hahn. Just not the biggest this year.
Rummaging thru some more of last year’s comments and predictions, we also have….
Linda who told us: “From the outstanding results of the stock market this year, we can predict that the only way it can go is up in 2014! Everyone and their grandmother will be piling into the stock market anticipating the juicy inevitable returns, which will take it up by at least 20% at the high.”
Solid premise, even if we only got to an ~11% gain. That’s just half what you promised, Linda!
earlyretirementsg declared “I totally don’t believe in market prediction…” and then went on to make his anyway. Unfortunately, they were wrong. Although in calling for 1700 on the low, he got to within 42 points.
Dave @ The New York told us: “I’m pretty sure I’ll get this right through osmosis as the NYSE is in right here with me in NYC!” And then went on to get it wrong. The closest he got was his 2117 call on the close, off by 58.
Frankies Girl “spent most of this year reading lots of blogs and learning what I could…” and then got it wrong. Perhaps more reading? Still, her 1777 low was only off 35, crushing Dave who has the NYSE right in his back yard!
Adam W. “…killed a chicken and spread its insides around. They formed a stock graph that clearly showed that the year was going to end down.” Wrong, but at least he tells us the chicken was delicious.
Anyways, Enjoy proved overly optimistic with his call for 2325 on the close.
“Why? Mostly because this New Year’s Eve I drunkenly argued that 2013 was the greatest year in the history of the world and that 2014 will be also be the greatest year in history.”
Surprise! Alcohol does not an accurate market prediction make.
OutBy54 confidently told us “A short term correction is inevitable during 2014.” Easy call, that. A short-term correction happens at least once most every year. Not this year! But then, as he confided, he “only spent 30 seconds thinking about it.” We got what we paid for….
“Inevitable.” I said in reply. “Now that’s the kind of mockable word usage I was hoping to see in these predictions….My hope, for mocking purposes, is that you’re dead wrong.” Wishes do come true!
Mark had “No real logic, just throwing some numbers out there.” They were the wrong numbers as it happens. But not as wrong as those of some claiming to use logic.
Ralph was also “Just throwing out numbers” that also happened to be wrong. But really, that’s all any of us are doing, Ralph just admits it!
m also put “…my hat…in the ring, with minimum thinking involved.” Good to know coming up with the wrong answers doesn’t have to take much thought. Still, m is already bugging me in comments from last year as to when this post declaring his/her failure will appear. Here you go m: Your validation as a loser has arrived!
Mrs EconoWiser relied on “A little stock fairy” to give her the wrong predictions. Damn fairies.
jkenny said “Definitely feel like the market’s going to lose it’s head of steam by year end, but I felt that way in 2013 too. Could I have been wronger?!” Maybe not wronger, but wrong again none-the-less.
Jeremy of Go Curry Cracker fame said “Since I want the stock market to crash this year so I can move our bond position into stocks, I expect the stock market will do nothing but go up. This is pure science.”
Right on target and his 2089 close was only 30 points too optimistic. Better (worse?) luck in 2015, Jeremy!
Dave Schmidt whined: “This is a very difficult prediction to make since I cancelled cable and I never hear any financial news or predictions these days.” And then went on to make some of the better predictions:
- High: 2213, off by 122 (OK, this one’s not so good…)
- Low: 1719, off by 23
- Close: 2071, off by 12
Seems avoiding the financial news doesn’t hurt!
smedleyb complained in his comment/prediction last year about my having called him “completely wrong” in his predictions for the year before. Then he went on to say:
“A nearly 20% swoon lower in early spring puts the kibosh on this unrelenting bull. The market spends the year trading in a range as contradictory crosscurrents like higher incomes, improving confidence collide with rising rates and the resurgence of ‘fear,’ conspicuously absent from this market for the greater part of a year.”
And I get to say, “completely wrong” again!
Interestingly, his call of 2050 for the high would have tied him as one of the winners had only he made that his call for the close. Instead, he told us to expect 1800 at year’s end.
Maybe this year, smedley.
Think you can do better?
In the comments below post up your predictions for the S&P 500. Tell us the high, low and where it will close come December 31, 2015. And put in a line or two as to why so I’ll have something to mock you with when you fail.
All in good fun, of course, and knowing this is all just so much nonsense.
That right there is the difference from us here at jlcollinsnh and all those TV talking heads. While we’re all making predictions, unlike them, around here we know we’re just talking out our…
For those of you who were wrong this year, there’s no reason you might not redeem yourself for 2015 if you’ve the courage to try once more. We’ll be waiting to mock you yet again if you fail. Heh.
For those who did well, let’s see you do it again. As Rob Diesel learned, mocking your failure will be even sweeter!
Don’t feel bad. In all likelihood, you’ll get to mock me too. Here are my 2015 predictions:
- High: 2533
- Low: 1812
- Dec. 31st, 2015: 2471
Last year, when I made my calls, I was already planning to predict a down year for 2015. I figured this bull market, in which we’ve been basking, would be ready to pack it in. In fact, I didn’t really expect it to last thru 2014.
But here we are and, as we enter the new year, the economic recovery this rising market has been predicting seems to be here and getting stronger. My guess is the momentum will keep rolling and we’ll see an even better year than last. If I’m right, this will take the bull into its seventh year.
Along the way, I think we’ll also finally get a real correction in the 10-15% range, most likely in the first half. But I don’t expect it will last long.
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. My owl pellets are just as moldy.
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.
Finally, thanks for your readership and support of this blog!