The Investor’s ’10 Foot Bargepole’ Test

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By Alan Steel

Exactly a year ago “pessimists” were fretting over what they called an “expected hard landing” (whatever that is) in China, doubling it up with “deflation fears” in the West. 

Anybody noticed that suddenly it’s Inflation Fears, Brexit and Trump that’s renewed their Valium prescriptions?  (One good thing about these folks though is that their elbows and rear ends are interchangeable).  Confusingly for them, global growth is still expanding.  As it does most of the time.

Now,  presumably thanks to their constantly wrong predictions of doom, “experts” decree it’s impossible to forecast investment returns.  But here’s my observation. 

Those referred to as “gurus” are the worst of the lot when it comes to predictions.  John Mauldin has over a million followers despite saying eight years ago “If you expect a major bull market to develop in this climate you are not paying attention and need your heid examined” (I added the last four words, but you get the drift).

“Dr Doom” Nouriel Roubini, darling of the media said at the time “My predictions for the coming year unfortunately are even more dire.”  Echoing his gloomy sentiment was Harry Dent who charges $90,000 a day plus first class air fares from Florida for his services. 

Who says pessimism doesn’t pay? 

Harry’s been predicting 50% market falls every year since 2011.   Want some good news?  He’s at it again now.  If he turns optimistic again you’ll be the first to know.  As a rough guess I’ll be renewing my new driving licence before then.

Following yet another miserable year of forecasting by “experts” in 2015, when the consensus was optimistic for a brief spell but were wrong once more, by the December they’d gone back to being comfortably glum.  (Apologies to Pink Floyd).  It was nigh impossible finding anybody with anything good to say about 2016. 

Which probably explains the following report I read only last week….

“Absolute Return funds topped the retail sales charts every quarter last year butinvestors were wrong footed.  2016 was an annus horribilis for the UK Funds industry.” 

Faced with doom laden predictions from a quoted majority, net retail investment sales plunged 72% in what “experts” claimed was “an extraordinary and challenging geo-political year.”  

Really?  

Tell that to our clients.  

By the way, do have a look at the recent disastrous returns from Absolute Return funds.  You’ll be relieved to know we kept our ten foot bargepoles handy.

Find out how pessimism can hurt your profits here.

Alan Steel, Chairman, Alan Steel Asset Management

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