https://twitter.com/MktwHulbert
His interesting comments speak for themselves, but if you don’t know who he is, he’s sometimes cited by TMF as someone who rated their Stock Advisor very highly.
He came up with the idea a long time ago of writing an investment newsletter that tested and rated other newsletters. A friend of mine owes his investment success to reading Hulbert and starting a subscription to Stock Advisor.
And here are a few excerpts from Mark Hulbert’s article:
…it’s worth reminding ourselves that the markets almost always overreact to geopolitical news…Technically, the primary consequence of the British referendum will be to set in motion a lengthy negotiation process between the U.K. government and the European Union (EU) on the future British role in that union. That negotiation period is initially set to be two years, but it can be extended indefinitely…For the next couple of years nothing changes. Britain will remain in the free trade zone that the European Union represents, subject to the same EU laws and regulations that it had been previously…
…Vincent Deluard, Europe Strategist for Ned Davis Research, adds: “Our gut feeling is that things will get solved the European way: very lengthy negotiations will be finally settled down at the last minute with a compromise that will kick the can down the road”—and, in the end, “nothing will change.”…
…Consider a study of 51 major geopolitical crises since the beginning of the 20th century that was compiled by Ned Davis Research. The list includes events that most everyone would agree are even more momentous than whether or not the U.K. ways a member of the EU — events such as the 9/11 terrorist attacks, Pearl Harbor, the Cuban missile crisis and the Kennedy assassination…
The firm found that, more often than not, the stock market quickly recovers from the losses it inevitably incurs in the immediate aftermath…On average… within a year it was 6.3% higher.
George Slezak, editor of the Stock Market Timing advisory service, believes the recovery will be even quicker than these historical data would suggest. He is advising clients to expect a “full recovery” in just a “few days.”…Some adventurous advisers are treating the markets’ plunge as a blessing in disguise, since it enables them to snatch up good quality stocks at lower prices… This isn’t to say there won’t be extraordinary volatility in coming days. But predicting those short term swings is impossible; you have just as much chance of making money from them as in a casino…Fortunately, the longer term outlook is less uncertain—and more upbeat, though it isn’t easy to keep a long-term focus when the markets are panicking…
Mark Hulbert, founder of the Hulbert Financial Digest, has been tracking investment advisers’ performances for four decades…
I also found this from Hulbert: http://www.marketwatch.com/story/what-the-single-best-stock-…
Do you agree that overall stock market returns in the next 10 years will be lower than historical averages?
GDP data would seem to support the same thing. (This author links GDP growth to government regulation, but the GDP/stock market return data is still interesting.) http://www.forbes.com/sites/mikepatton/2016/01/27/the-dow-jo…
Saul’s “coiled spring” theory may just apply to certain stocks rather than the whole market. We think we’ve identified undervalued companies. That’s the whole point of stock picking. I also see a lot of companies that seem to be overvalued.
To me this makes Saul-style investing even more important, if we cannot count on index funds and the like for the level return we need. In other words, the idea that investing in “the market” may not de facto make us as much money as we would expect based on history, only serves to stress the importance of finding the right companies to invest in (and the right prices).
Curious as to whether anyone else sees it this way, or strongly disagrees.
I think timing the market is and will continue to have poor payoffs.
I have the receipts to prove it.
Additionally, the wealth being created by real people in real companies doing real things is very very big. It has to show up somewhere.
Cheers
Qazulight
Curious as to whether anyone else sees it this way, or strongly disagrees.
Sort of…
We think we’ve identified undervalued companies. That’s the whole point of stock picking.
Not “the whole point of stock picking.” That’s value investing. The other part is growth investing, picking stocks that will outgrow the indexes. These stocks are not necessarily “undervalued” from a value investor’s point of view.
Now, if you can find undervalued growth stocks, that’s the holy grail!
Denny Schlesinger
‘I think timing the market is and will continue to have poor payoffs.’
This is a popular sentiment but one I have never understood. I cannot distinguish between ‘timing the market’ (said to be bad) and ‘be greedy when others are fearful’ (said to be good).
I do little else but time the market. When it is up and everything is green, I relax and imagine myself to be on holiday. When it is down and red starts to spread, I get to work.
So I suppose I am an avid market-timer, that most despised member of the investing fraternity! Or am I just a stock-picker? That is held to be not nearly so bad.
It’s a strange world.
This is a popular sentiment but one I have never understood. I cannot distinguish between ‘timing the market’ (said to be bad) and ‘be greedy when others are fearful’ (said to be good).
They are easily distinguishable if the first is about the overall market and the second about a beaten down stock which is how I understand it.
Also, looking at a market chart (DJIA, SPX, COMP) you are looking at a conglomeration of signals but distorted by the weighing of a few large companies (AAPL, AMZN, GOOG). Looking at a single stock you get a cleaner signal.
That said, the Brexit dip, for example, was a market timing opportunity.
Denny Schlesinger
I don’t understand these sentiments either. The broad market selloff following the Brexit is a classic panicked overreaction, which you can view as either an opportunity, or join the panic. For volatility investors, it surely was profitable. There’s nothing wrong with buying cheap while markets are down.
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