“As communications technology continues to turn the commercial tide on editorial integrity, the stronger these currents run against the unwary investor herd. And so my stomach turns with the latest in a long line of four horsemen prognostications from Albert Edwards of Societe Generale…”
By Alan Steel
“…Albert Edwards believes the events of the Black Monday crash in 1987 ‘could happen again tomorrow’…” Investment Week
Honestly, I’m not sure who’s more to blame here; the people who keep predicting stock market Armageddons or the publications that continue to write about them.
In my opinion each of these articles should come with a not-so-Latin hazard warning to first “caveat peruser” (let the reader beware), followed by “Nullius in Verba” (check it out for yourself).
Sadly, they don’t.
And as communications technology continues to turn the commercial tide on editorial integrity, the stronger these currents run against the unwary investor herd.
The Horsemen’s Hoofs
For perspective, let me recap Mr Edwards’ previous predictions by example – and these are just a few of them since March 2009:
- The Last Time This Happened Was January 2008 – Zero Hedge, August 2017
- The Stock Market’s Nightmare Scenario – Business Insider, October 2017
- If I’m Right, The US Stock Market Will Fall 75% – Business Insider, January 2016
- Here Comes The Biggest Stock Market Crash in a Generation – Fortune Magazine, 2016
- Get Ready to Relive the 2008 Crisis – CNBC, July 2015
- 99.7% Chance We Are in a Bear Market – ValueWalk, August 2015
- Strategist Albert Edwards Warns Again the Market May Have Peaked – The Guardian, October 2014
- The Freddie-Kruger-Like Nightmare for Stocks is Coming – Zero Hedge, February 2014
- Warning: Stocks to Crash! Gold to Top $10,000: Albert Edwards – CNBC, April 2013
- Bernanke’s Easy Money Train is About to Crash – Business Insider, September 2013
- HAHAHAHA, The Bulls Aren’t Laughing Anymore, The Stock Market Will Collapse And All Hope Will Be Lost – Business Insider, May 2012
- China’s Collapse Will bring ‘Economic Crisis to Climax in 2012’ – The Guardian, January 2012
- China is a Freak Economy, And It Will Crash and Take Dow the Rest of the World – Business Insider, January 2011
- Before China Crashes, This is Going to Happen – Financial Post, January 2011
- Stock Market Faces a Bloodbath – The Telegraph, August 2010
- S&P 500 Set to Crash 450 Points – CityWire, August 2010
No doubt Investment Week (and others of its ilk) is an excellent publication. I’ve agreed and disagreed with articles published therein for years. And that should be the case when journalists take positions on issues and present the facts; as their own “Hippocratic Oath” requires them to abide by the rules of their scribbler gods to present well-balanced content and uphold specific ethical standards.
Moreover, as true for physicians as for journalists; they are each first to do no harm.
But the above examples are little more than pure chocolate watch investor theory, where at some point the timing is going to be correct. You just never know when.
As in yesterday’s Simple-Minded Millionaire – Against the Grain, “Historically speaking, markets eventually go down. And a look at double digit losses in the S&P 500 from 1928 to 2016 shows the following averages: 5% losses three times a year, 10% losses once a year, 15% losses once every two years, and 20% losses once every three to four years. In other words, once every four years an asteroid destroys part of the village.”
But this is no basis upon which to plan an investment strategy.
The Edwardian Crash Technique suggests investors should miss out on the last eight years of market rises and compounded interest (with reinvested dividends creating a potentially life-changing kind of income come retirement).
And the impact of chocolate watch predictions, along with the many other celebrity-style commentators who follow it – to the detriment of the throngs of investors who listen to them – is evident everywhere.
There is over $10 trillion sitting in deposit accounts in America, over £2 trillion here in the UK, and we have some of the lowest stock market engagement percentages ever seen.
The negativity is working against investors.
Primum non nocere is a Latin phrase that means “First, do no harm.”
If you’re an investor now, or planning to be in future then do yourself a favour and start practicing your awareness of whose advice you’re listening to.
Because awareness is the first step towards doing yourself no harm, and good advice the next step towards a successful retirement.