Readers of The Market Scoreboard will note that one of the major issues which comes up here are active vs. passive models of investing. People who are interested in this subject might want to follow up the following Financial Post article.
Almost a year ago I posted a financial prediction by Felix Investments and published by Forbes.com.
Here is the quote from Felix Investments: "... we believe the stock will be north of $100 when we can sell in November. If we are wrong here and are disappointed with the transaction it will be because we only doubled our money – which would be a major disappointment but a highly unlikely one in my opinion!"
It isn't particularly hard to see that Facebook never got close to $100 per-share in November for the reason that it never really crested $50 per-share since becoming public.
But I'm going to mark this as a failure for Forbes, not Felix Investments. But why am I blaming them for this blunder? After all, aren't they just reporting the news? Isn't it their job to provide just the facts?
Here is why:
Forbes are free to choose to report on any financial news they want. What they chose was to reprint an advertising leaflet from an investment company. No research was made as to the veracity of the claims. No past or present history of the company making the prediction was exposed. No follow-up was made. No reason was given as to why this information is important or relevant. At best this is a cheap way of placing some text on the prime Internet real-estate that is Forbes.com so that an ad can be placed alongside. At worst? I don't want to go there.
Disclaimer: I am not now, nor have I ever been a Facebook shareholder
The date is July 28 2006. The publication is bloomberg.com and the article has the quote: "Things will be OK, and you don't need to run away from stocks.".
I admit that telling me that I don't need to run away from something is a backhanded way of recommending it. But taken within the context of the entire article I will treat this as a stock prediction against the market at large. I'll translate it to "don't sell" and give it a year to play out.
We see that the S&P 500 rose some 25% throughout the year and eventually settled back by 2008 to around the level it was when the article was originally published. By October of 2008 things were looking bad, but that's over two years after the prediction and nothing in the article suggests that the prediction should be taken to cover that extended period of time.
Consequently I'll mark this prediction as correct for Bloomberg on The Scoreboard.
I don't care one way or the other, and while this isn't exactly a financial prediction I will nevertheless use Mr. Angel's diatribe as an anchor for checking back on bitcoin in one year's time. So expect an article right here around April of 2014 in which we will take a look at how this purely digital currency faired after the fame and notoriety faded.
The fact that bitcoin is so popular in the news these days doesn't hurt my SEO either.
Arnie Kaufman is editor of Standard & Poor's weekly investing newsletter, The Outlook. In this BusinessWeek article from January 7 2001, Kaufman wrote that we should "Expect More Rough Sledding for the Markets". As for how long, it seems that all we have to work with is that "The going will remain rough for a while."
To make sense of this cagey prediction I'll choose 1 year for "a while" and no significant rise in the value of the S&P 500 over that period of time.
On the day the prediction was published the S&P 500 traded at around 1,333. Over the next 12 months the average would be 1,196 without significant peaks or troughs. Consequently, I'll mark this prediction as correct on The Scoreboard.