In 2012 I Learned That…
- Joshua M Brown
- December 31st, 2012
It's already the last day of 2012? How did that happen? Did we at least learn something?
You've already heard enough from me this year, below I get a little help from my friends!
Enjoy and Happy New Year - JB
In 2012 I Learned That...
Herb Greenberg (CNBC): we can ignore the Mayans.
Lauren Young (Reuters): I often like the social media iteration of people more than the in-the-flesh version.
Tom Brakke (Research Puzzle): In investing and politics, detailed analysis and an effective ground game beat belief and bluster.
Kevin Roose (New York Magazine): it is impossible to make normal people care about Libor.
Tadas Viskanta (Abnormal Returns): Betting on the end of the world is a mug's game.
Greg Harmon (Dragonfly Capital): no matter how much you try to shut out the noise (politicians, sensationalist reporting, etc.) it inevitably creeps in. This past year may have been a new high in noise. Recognizing that and then negating the bias it creates is critical to staying sane!
Kenneth Scigulinsky (Virtus): A backup electric generator is the ultimate status symbol.
Dan Gross (The Daily Beast): the relentless flow of positive U.S. economic data is simply another sign of irreversible decline.
Mike Alfred (Brightscope): it's better to be kind than smart.
Kelly Evans (CNBC): you are what you Tweet.
Ivanhoff (StockTwits): the market could be, and more often than not is, an excellent forward-looking mechanism. It started to discount a housing recovery at least 6 months before economic data confirmed it and the media noticed it. Just pay attention to the 52-week high list - it talks.
Jeff Miller (A Dash of Insight): disaster looms--the reasons change faster than the Fed can print money!
Cullen Roche (Pragmatic Capitalism): in the face of fiscal cliffs, apocalyptic predictions and a persistent financial crisis, 2012 proved (once again) that measured optimism will always defeat persistent pessimism.
Jonathan Miller (Matrix): a housing recovery really doesn't need to be based on solid personal income growth and/or strong employment levels. More importantly I realized that pie is better than cake.
DH (Dynamic Hedge): Most of what passes for market news is really just noise and opinion and is usually around two standard deviations away from reality.
Mark Dow (Behavioral Macro): no matter how large the mountain of evidence, no one will ever give Paul Krugman the satisfaction of telling him he was right
Frank Zorilla (ZorTrades): Anyone who touts their winning percentage instead of their P & L is just full of shit.
Todd Sullivan (ValuePlays): my opinion that Congress was a collection of incompetent half-wits with a frightening inability to perform even the rudimentary functions of their job was, in fact, grossly optimistic.
JC Parets (All Star Charts): the most important thing we can do as market participants is to look outside of the United States. There are always trending markets in other countries and asset classes around the globe. It's not just about AAPL and the S&P 500. There's plenty more to choose from.
Invictus (The Big Picture): John Adams got it exactly right: "One useless man is a disgrace, two are a law firm, three or more are a Congress."
Steve Spencer (SMB Capital): data always trumps dogma! Not learned, reminded.
Izzy Kaminska (FT Alphaville): robots and technology have a much bigger role in this crisis than most people appreciate.
Mike Wilkins (Instagram Culinary Society): just because you go where the grass is greener, that doesn't exempt you from watering it.
John Melloy (Producer, CNBC Fast Money): you never actually have to solve anything. Just keep printing, just keep talking, just keep making the same thing in a different package, just keep the water running and assets will inflate, you'll get elected, people will buy mini-iPads and your significant other will think you're doing the dishes.
Jay (Market Folly): It only takes one or two big decisions to generate the bulk of your performance for an entire year. Related: David Tepper has brass balls (literally).
Amy Resnick (Pensions & Investments): an old one but a good one - if pro is the opposite of con, it seems progress is the opposite of Congress.
Chess N Wine (iBankCoin): bulls make money, bears make money, while pigs get slaughtered and start obsessing over cats on Twitter. Maybe in 2013 we can all get back to being real human beings.
The Fly: (iBankCoin): we are all here on Earth to serve the Greeks.
Max Keiser (The Keiser Report): far more people are interested in Stacy Herbert's hair style than how badly they're getting screwed by the Fed
Andy Swan (SwanPowers): there are certain people you just don’t fuck with. It is better to be one of those people. (editor's note: I've hung out with Andy Swan, he is definitely one of those people.)
Linette Lopez (Business Insider): when demand appears, suddenly uncertainty disappears, like poof!
Brian Sullivan (CNBC): no matter how much I learn about politics, I will never, ever truly understand it.
Phil Pearlman (star of 'The Doctor Phil Mysteries' on CBS, 1986-1991): containing opposing views in your head to mull over time provides an advantage over the majority of investors who are unable to sit with conflicting information for more than a few moments.
Joe Fahmy (The Next Big Move): Ancestry dot com is a horrible dating site…unless you live in West Virginia.
Charles Kirk (The Kirk Report): Over 80% of what we do as traders is a waste of time, energy and focus, the Pareto Principle (80% of trading profits come from 20% of your efforts) is valid and so very important to recognize. To achieve our best performance, we must not only understand which 20% of our activities directly contribute to making successful trades, but even more important is to remove all of the 80% that do not.
Steve Grasso (CNBC Fast Money): holding your best trades and strategies up to the mirror worked more often than not. When is it time to break the mirror? Or is that worth 7 years bad trading luck?
Enis Taner (Risk Reversal): current account deficits are synonymous with investment account surpluses, and current account surpluses are synonymous with investment account deficits.
Leigh Drogen (Estimize): even after 40 VCs say no, the one that says yes and funds you is still only counting on a 20% shot that you can deliver everything you put in that pitch deck.
Alison Kosik (CNN): lots of grown men like and listen to songs by Taylor Swift. Oh, I also learned dreams do come true.
Eddy Elfenbein (Crossing Wall Street): the people predicting the impending collapse of the Treasury bond market are beginning to resemble Linus waiting for the Great Pumpkin.
Bill Singer (Broke and Broker): politicians named Weiner shouldn't take pictures of themselves in underpants; the author/lover of a married general should not title her book about him "All In;" you have to be one dumb MF to tempt fate by running a shop called "MF Global;" and there are idiots out there unabashedly discussing their insider trading in emails and on the phones.
Kevin Ferry (The Contrarian Corner): if the data was good, it was contrived. if it was weak it was "accurate."
Aaron Task (Yahoo Finance): leadership matters.
Matt O'Brien (The Atlantic): unskewing polls works about as well as unskewing inflation.
Jeff Kilburg (Killir Capital): we can buy both Bonds & Stocks, thanks Bernanke!
TED (Epicurean Dealmaker): lessons are overrated.
Lisa Pollack (FT Alphaville): if everyone took their answers to survey questions as seriously as banks are now going to have to take their LIBOR submissions, global levels of truthiness would increase exponentially.*
* According to an online survey of 7.2 self-proclaimed "experts in financial services", at least one of whom was a (dead) cat whose initial survey response bounced, conducted by me last weekend using SurveyMonkey while hyped up on coffee hanging around my flat in pajamas between sessions of Wiki-, YouTube-, and Reddit-ventures.
Doug Kass (TheStreet): Congress would probably have acted more swiftly to avert the "Fiscal Cliff" if our right to own assault rifles was at stake.
Justin Frankel (Wavecrest Partners): even when volatility feels low, it still smiles!
Jeff Carter (Points and Figures): I learned how to deal with crappy people, who my true friends were, and that I loved my wife more than ever after 25 years.
Jonathan Wald (Producer, Piers Morgan Tonight): It's not news unless @fivethirtyeight polls it, @Harry_Styles sings it, @piersmorgan insults it, or a 14 yr old who blocked me snapchats it.
Tim Knight (Slope of Hope): Ben Bernanke's power to artificially inflate the stock market for his banking buddies is not infinite, and that each successive round of money-printing is generating a radically smaller pop in the market lasting a substantially shorter amount of time. At this point, any further QEs will last longer than a sixteen-year old boy getting lucky after a successful prom date.
Brian Lund (bclund): Nutmeg is an under-appreciated spice. That, and that I've sold myself short for most of my life.
Dan Primack (Fortune): a $16 billion IPO = cataclysmic failure.
Dasan (Scott Sixpence): I've had to share myself with others, principally with some crazy Russians, a drunken Dutchman, and a big Bulgarian woman named Olga.
NYT Fridge (8th Avenue): NYC is home.
Barry Ritholtz (The Big Picture): as a media junkie and consumer of an awful lot of content, this was the year I realized that Sturgeon's Law does not exempt the Press. The excessive hype, absurd focus on trivialities, short attention span and superficialities -- that was the mainstream media. The online media can be even more absurd - breathless, SEO driven, content-farmed junk. The degree of misleading rhetoric, absolute devotion to disproven ideas, innumeracy and cognitive failures for both are hazardous to your wealth.
Greg Battle (Internet Svengali): when Fiscal Cliff diving, no matter the height, spins or twists, people will only ever remember how you hit the water.
Nancy Miller (Journalist): the clock is right twice a day. Except on Capitol Hill. That's how broken things are there.
John Carney (CNBC NetNet): I learned that (a) banks have no idea what risks they are taking (Whale/Teapot), (b) less government revenue doesn't "starve the beast" and trigger lower spending, and (c) when you are young, hangover cures work; later it is an error to use the phrase "work" and "hangover" in the same sentence.
Jason Raznick (Benzinga): I shouldn't spend more than $200 on a tablet because a newer, better one will be out in 3 months. Never buy a tech IPO. And, if you want traffic, write about Apple.
Howard Lindzon (VP Public Relations, Citigroup): my prostate controls my life. Even while I type this, I am thinking about peeing.
Jason Zweig (Wall Street Journal): easy money softens even the hardest hearts.
Roger Nusbaum (Random Roger): politicians are even more of a hindrance to problem solving and running the country than we ever realized.
Roben Farzad (BusinessWeek): we should put aside the alienation, get on with the fascination: Rush was finally inducted into the Rock & Roll Hall of Fame.
Tom Brammar (Hogwarts): we should ignore the mainstream, history proves they're largely irrelevant. Weirdos, mavericks and outcasts are the map of the future.
Keith McCullough (Hedgeye): one legged ducks still swim in a circle.
Blaine Rollins (361 Capital): the least volatile issues in both life and investing can quickly become your most volatile. The inverse is also true.
Brian Shannon (AlphaTrends): the news continues to be a distraction for making money in stocks. Only price pays!
Stacy Herbert (The Keiser Report): crime pays - but before you go out and start rigging global interest rates, trading with the enemy or laundering money for the drug cartels, do make sure that you are deemed either 'too big to fail' by regulators or you're able to get the President on the phone.
Michael Batnick (Fusion Analytics): In this Hilsenrath driven market, weekly charts help quiet the day to day noise.
Dr. Goose (Limericks Économiques):
In 2012 I concluded
That my vote for the House is deluded,
Since the shape of my district
Regrettably IS tricked
To keep the opposer excluded.
David Merkel (Aleph Blog): The greed of people looking for magic yield can overcome deteriorating fundamentals, at least for now.
Stacy-Marie Ishmael (CUNY Graduate School of Journalism): relationships matter more than returns.
Erin Geiger-Smith (Reuters): People only read contracts when they involve pictures filtered in Amaro. Also, my Terms Of Service say I own your blog now.
Downtown Josh Brown (TRB): a chubby Korean guy with a dream could ride his invisible horse to international stardom - so inspiring! Also, don't write parodies of living authors or philosophers.
Eli Radke (TraderHabits): You have to be a contrarian - at least part of the time and with a reason. Also, it is best to keep things sophistically stupid when the "reasons" the market moves change every half day.
Cathleen Rittereiser (Social Liaison, Honorary Consul): learned from the Republicans - "It's the Bill of Rights, stupids." Also, If you plan to drown in a bathtub, stay friends with Kevin Costner.
Tim Connelly (Sconset Capital): if you ban large sodas, only criminals will have large sodas.
David Blair (Crosshairs Trader): trading price rather than expectations, mine or otherwise, is all that matters.
Heidi Moore (The Guardian): power, like money, has to be earned, and you should be extremely skeptical of those who gain it suddenly without earning it; they will never wield it with the care it deserves. Also, the future is still, incredibly and despite all odds, always going to be better than the past for society as a whole. No matter how much we trip ourselves up, we keep making progress.
Adam Feuerstein (TheStreet.com): bio-pharmaceutical companies were more interested in profits over patient well being than ever before.
Bob Seawright (Above the Market): I am no less susceptible to behavioral biases than everyone else, no matter how much I tend to think (and want to think) otherwise.
Rob Passarella (Datasift): there is abundant oil, Berlusconi can have a comeback and J-Lo & the US Gov can't convince us to buy Fiats
Julian Hebron (The Basis Point): the wealthier you are, the harder it is to get a jumbo mortgage (but at least your loans are helping end a 5 year non-agency MBS drought).
Patty Edwards (Trutina Financial): my boys and hockey are way more important than markets, TV, and politics.
Kid Dynamite (New Hampshire Maple Syrup Commission): opinions that are loudly voiced are not necessarily widely held.
Larry McDonald (Author, Risk Consultant): we should never invest or bet on Eurozone politicians, short Euro and Eurostoxx 600 in Q1.
Cassandra Does Tokyo: The market for bad, tainted and/or self-serving investment analysis/advice is broader, deeper and more insidiously seductive than ever before - aided by the Internet and it's ability to make virtually anything appear bona-fide and respectable. Being skeptical of one's information sources has rarely been more crucial in forming one's view.
Joe Donahue (Upside Trader): we seemed to have lackadaisically embraced Socialism as a way of doing business.
Sal Arnuk & Joe Saluzzi (Themis Trading): "the grass is always greener in someone else's yard" was never, ever, said by a financial industry lobbyist. Oh, and also that happiness is a good back-up plan complete with Honda generators...
Michael Kitces (Nerd's Eye View): technology can augment the value of wisdom and experience, but it can't replace it.
Interloper (Interloping): the market used to be the place where dogma went to die, it's sharp edges shaved off by contact with the real world. The most theologically fervent just donated their savings to smarter, more pragmatic investors. Now we have people selling stocks because their chosen political candidate didn't win. Equity returns are held captive by an unfixable tragic political battle in which one side thinks government debt can be strapped on infinitely and the other side wants to burn the whole thing down. Goldbugs keep making investment returns in a currency they think is invalid. 2012 is when market prices joined the Shoutfest.
Lucy Marcus (Reuters): crime doesn't pay...much...
The Goat (Day Trader Boot Camp): criminal scumbags really do run the world.
Julia La Roche (Business Insider): Jeff Gundlach always wins.
Cardiff Garcia (FT Alphaville): advice is often well-meaning but rarely useful. Typically it's a justification for the advisor's beliefs and betrays the inadequate attention paid to the advisee.
Todd Harrison (Minyanville): the only difference between genius and madness is acceptance.
Joe Weisenthal (Business Insider): "insiders" are overrated on all kinds of issues - everyone is always desperate for the "take" of people who are inside the thick of things, whether they're CEOs, traders, or political operatives, or any other movers and shakers. But as Nate Silver, Paul Krugman, and others showed, the best analysis often comes from intelligent interpretation of public data. Insiders are just as susceptible to biases and ignorance as everyone else.
Mike Murphy (Rosecliff Capital): no matter what happens in these crazy markets, hug your kids every night.
So, what did we miss? What did you learn this year?
In 2011 I learned That... (TRB)
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The Reformed Broker is a blog about financial markets and the economy. Joshua Brown is a New York City-based investment advisor for high net worth individuals, charitable foundations, retirement plans and corporations... More.