In 2013 I Learned That…
- Joshua M Brown
- December 31st, 2013
Seems like just yesterday the year 2013 was just getting underway – and BOOM! Just like that, it’s over! It’s been an amazing 12 months – mostly good for investors and the people who love them.
But you’ve heard enough already from me this year (I’ve heard enough from me too!), so for today’s look back, I got a little help from my friends!
Happy New Year and thanks for reading! See you on the other side. – Josh
In 2013 I Learned That…
Roger Nusbaum (TheStreet.com): investor behavior continues to not change. Indexing has had a great year so now too many people wonder whether they should switch to being indexers. Of course a few years ago indexing was never going to work again.
Jonathan Miller (Miller Samuel): tougher mortgage underwriting standards by banks made housing prices rise and, more importantly, Rhode Island is 3% larger at low tide.
Doug Kass (Seabreeze Partners): the crowd almost always outsmarts the remnants. Grand turning points in the stock market are as infrequent as Triple Crown winners in baseball.
Brian Shannon (AlphaTrends): (was reminded) that the market doesn’t care about my opinion and that “news” is nothing more than “noise” Only Price Pays!
Art Cashin (UBS): Bitcoins and Twerking: As Samuel F.B. Morse once typed, “What hath God wrought?”
Eric Peters (wkndnotes): Bernanke’s bash won’t end till the last scruffy bridge-and-tunnel straggler squeezes his way into the club.
Michael Kitces (Nerd’s Eye View): a large segment of Americans will completely trust an anonymously designed crypto-currency that can be fraudulently stolen from a QR code broadcast on cable television, but still has no trust that the Federal Reserve has any idea what they’re doing with our actual currency.
Matthew Zeitlin (Buzzfeed): right when you got tired of bitcoin, there was dogecoin.
Brendan Conway (Barron’s): big things can change right under your nose, or browser. For instance, all it takes is Miley Cyrus to threaten a great Mark Twain quote: “Clothes make the man. Naked people have little or no influence on society.”
John Hempton (Bronte Capital): a really obvious short is a really dangerous one. Oh, and you should own the equity in bankrupt airlines… See the fifteen bagger from American Airlines.
Invictus (The Big Picture): humility, along with the ability of those who have been wrong to acknowledge their mistakes, are at all-time lows and, sadly, trending lower still. Ideology can apparently hold sway against reason, facts, and data for longer than I’d imagined.
Dan Nathan (Risk Reversal): just as I have been “told” that you won’t find too many answers to life’s questions at the bottom of a bottle, there are more questions than answers at the end of a 140 character Tweet!
Guy Adami (CNBC Fast Money): if you’re busy twerking you’re probably not working.
Tadas Viskanta (Abnormal Returns): privacy is the new openness (see: SnapChat, Bitcoin, NSA, etc.).
Stacy-Marie Ishmael (Financial Times): most people think they mean well, and that’s what makes meaningful social change so difficult. Transformational change is incredibly uncomfortable and discomfiting – at best – and it’s rare for someone who thinks s/he’s already a decent person/socially progressive/not intentionally a hater to opt-in to uncomfortable.
Greg Harmon (Dragonfly Capital): investors lie about their view of the market and the resulting spikes in the VIX when their true views were unmasked on 3% pullbacks were great buy signals. Of course, now that you all know this it won’t work any more.
Phil Pearlman (Yahoo Finance): fear, the spreading of fear and the behavioral correlates of fear can all persist long after a crisis is over and markets have recovered.
Interloper (Interloping): I need to check my memes. I spent the middle part of the year drifting from market skepticism to bearishness because all I kept hearing was “peak margins”. Then I checked – operating margins, gross margins, EBITDA margins – are all within historically normal levels. The only thing that’s out of shape is profits as % of GDP but A) globalization might make that more sustainable and B) The divergence could also be fixed by steady profits and stronger GDP growth (ie: bullish reversion to the mean). I’m not a wild bull at this point, but I’m pissed I wasted three months being bearish because I believed a meme before I verified it. (editor’s note: Interloper paid extra for this much space, I take PayPal and BTC)
Nick (Barbarian Capital): it’s OK to start “small” because there is absolutely nothing like going out on your own.
Francine McKenna (re: The Auditors): if the power goes out often enough the clock on the stove will never tell the right time but the iPhone does.
Charles E. Kirk (The Kirk Report): programs that make up the vast majority of trading every day are impacting the market and, more importantly, I’m learning how to exploit and profit from their heavy influence.
Lawrence Delevingne (CNBC): full-time short selling is an almost impossible business — even if you’re eventually right!
Peter Lauria (Buzzfeed): you can indeed combine cats and corporations..that buying a house is a lot more difficult than they make it out to be on “House Hunters”..that you can only use the word “millennials” ironically..and that having a daughter makes Dallas Cowboys losses seems like not that big of a deal..
Eli Radke (Trader Habits): having a goal brings you one of two things, closer to who you are or closer to where you want to be. When it does both you really have something.
Kid Dynamite (Kid Dynamite’s World): I should expect the unexpected.
Peter Boockvar (The Lindsey Group): $1 Trillion of newly printed money can create quite a spectacular party.
Joe Weisenthal (Business Insider): the importance of disconnecting and shutting off the computer — I still haven’t figured how to actually do it, but I learned that it’s important.
Andy Swan (LikeFolio): it’s always better to be on the stage than in the crowd.
Kenny (Hit The Bid Radio): when the government takes over the stock market, just go with the flow.
Kevin Depew (Bloomberg): if you have an old lower back tattoo from like when the Spice Girls were popular and then try to fix it so you are not embarrassed at the beach with your children, do not give that guy $400 to make it say Miley CySpicerus Girls because people are so judgmental today, especially family.
Tren Griffin (25iq): the Nobel Economics Prize Committee either has a sense of humor or is completely detached from reality when it awarded half the prize to Eugene Fama.
Tom Brakke (Research Puzzle): “the valuation actually doesn’t matter at this point.” (It took me until the morning of 12/30/13 before I learned that, from a high school junior who “doubled his money by lunchtime on Thursday trading Twitter stock options.” — quotes via the NYT.)
Jenn Ablan (Thomson Reuters): billionaire hedge fund managers are fantastic to cover.
Sean McLaughlin (StockTwits): RE-learned that sitting on my hands is the hardest thing a Trader can do and that I need to be better at it. MUCH better.
Downtown Josh Brown (Reformed Broker): this above all; to thine own selfie be true. Also, the purest form of redemption on Wall Street is getting Leo to play you in a movie, then all is forgiven.
Tim Seymour (CNBC Fast Money): merely talking about the bazooka in your pocket actually works when there is temporary global disinflation.
Cassandra (Cassandra Does Tokyo): there are truly no more secrets. And crime pays…the bigger and more audacious the better.
Dan Gross (The Daily Beast): it takes 54 months of expansion for many professional economists to realize a recovery has started.
Barry Ritholtz (The Big Picture): the most important thing for one’s professional success is the people you choose to work with
David Blair (Crosshairs Trader): the market will do whatever it wants…and often so.
JC Parets (All Star Charts): markets can remain solvent longer than you can remain irrational.
Nancy Miller (finance reporter): I will miss Ben Bernanke — he is a giant and a gent. I think we can now say the last crisis is over. Let the new games begin.
Jon Boorman (Alpha Capture): I am unable to grow a moustache like Tom Selleck
Ben Carlson (A Wealth of Common Sense): simplicity trumps complexity and less is more. Also, Eminem’s still got it.
Finansakrobat: the world is fundamentally long.
Jeffrey Kleintop (LPL Financial): no matter how speculative a new currency with no Treasury can be some people will still want it. Bitcoin believers? No, I mean the Latvians. Also, time heals all wounds. As soon as the 5-year trailing return for stocks hit the double-digits money finally began to return to US stock mutual funds. If it isn’t in the 1, 3, or 5 year trailing return–it’s ancient history to many.
Derek Hernquist (DerekHernquist.com): to fully embrace a “less is more” ethos requires thinking in terms of “either/or”.
Scott Krisiloff (Avondale Asset Management): listening more and thinking/speaking less is a key to success in both investing and in life.
Max Keiser (The Keiser Report): HSBC was funding Hezbollah and Joe Weisenthal @thestalwart had the courage to admit his negative views on Bitcoin were wrong.
Ryan Detrick (Schaeffer’s): when the masses panic on 4% dips, that is a good thing.
Jane Wells (CNBC): the government has the technology to track my activities, unless I want to buy health insurance.
Andrew Thrasher (AThrasher): no matter what an indicator or set of sentiment data says, until price confirms it means nothing. Also, avoid twerking competitions with strangers – you won’t win.
Jonathan Krinsky (MKM Partners): using sentiment as a contrarian signal can be dangerous in bull markets. “Overbought” does not mean “over”.
Jesse Livermore (Philosophical Economics): sentiment indicators are ambiguous and typically useless–no more accurate than a coin flip in terms of telling investors how they should position their portfolios.
Dasan: happiness consists of realizing it is all a great, strange dream.
Mark Dow (Behavioral Macro): facts are stubborn things—but not as stubborn as people who are motivated to ignore them… #PolicyBears
Eric Jackson (Ironfire Capital): when you have a winning trade, stick with it.
ChessNWine (iBankCoin): the coal industry is not going bankrupt anytime soon, according to the market.
Jeff Kilburg (KKM Financial): you can channel you inner MC Hammer and buy another $1.1 Billion worth of paper, pump-fake the Global investing community like Bill Laimbeer trying to draw a foul in the lane and still receive a gold watch at your Retirement party!
Mary Childs (Bloomberg): I learned how much I have to learn about golf and that kindness is the best currency, after Dogecoin. I can tell you what I didn’t learn, and that is what the fox says. Still bothered by that.
Aaron Klein (Riskalyze): The Obama administration can’t build a web site with four years and $600 million, the Snapchat guys think there is an even greater fool than Mark Zuckerberg, investment advisors really like engineering risk to fit clients, and the NSA actually does know what the fox says.
Ivan the K (Vandelay Industries): what the fox says is more insightful than what the bears said.
Ian Rosen (MarketWatch): a willingness to learn and creativity are your biggest assets in new ventures. Also, gin remained both functional and delicious.
Mr. John Flowers (New Yorker): thanks to Anthony Weiner and Eliot Spitzer, the U.S. still looks at New York like we’re left-wing communist, Jewish, homosexual pornographers.
Sam Ro (Business Insider): buying gun stocks during post-shooting dips seems to be one of the few sure things in the market. (editor’s note: Sam, you’re on my watch list.)
Morgan Housel (Motley Fool): the only people who think buy-and-hold is dead are short-term thinkers frustrated by their inability to follow it.
Stephen “The Sarge” Guilfoyle (Market Recon): that of all of the strategies that I employ, sometimes “buy and hold” is the smartest.
John Melloy: (editor’s note – John is still Missing In Action, presumed alive.)
Jason Kephart (Investment News): in a bull market, the fund companies’ stocks are often a better bet than the funds they sell.
Joe Fahmy (Zor Capital): predicting where the market will be at year-end is like coming up with the third member of Destiny’s Child…impossible.
Roben Farzad (BusinessWeek): I don’t need to be a LinkedIn Influencer to get 15% off at my dry cleaner.
Keith McCullough (Hedgeye): growth investing beat fear mongering, big time.
Michelle Celarier (New York Post): pyramid schemes throw off a lot of free cash flow, and investors love them.
Lydia Thew (Producer, Halftime Report): Good news is bad news is good news.
Druce Vertes (StreetEye): From the ‘receding’ euro crisis (with unemployment still off the charts in Greece and Spain and Italy) to Bitcoins, perception is reality, and it’s such a fine line between reflexivity and a circle jerk.
Jeff Carter (Points and Figures): lawyers will continue to make all the money.
Jonathan Wald (CNN): I learned to remember only God can judge you. Forget the haters because somebody loves you.
Eddy Elfenbein (Crossing Wall Street): When enough people hope for the apocalypse, safe havens become very risky, and risky assets become very safe.
Brian Gilmartin (Trinity Asset Management): Stocks go up in price, and Treasuries can decline in price. A new world, for sure…
Ivanhoff (StockTwits): crypto currencies might be the new gold, despite the fact that they smell like tulips.
Frank Zorilla (ZorTrades): boys in the hood play with matches to start a fire but rich boys in the suburbs just use a Tesla.
Leigh Drogen (Estimize): Congress would hold hearings over an anonymous dude who got a good swath of the world to pay attention to a crypto-currency he created for the anonymous transfer of value backed by absolutely nothing but supply and demand. Meanwhile, the entire SeekingAlpha message board peanut gallery wants to blow their brains out when a social media IPO trades at 30X revenue, please don’t tell them about Bitcoin. (editor’s note: Leigh, lighten up – you’re rich now.)
Mike Wilkins (Ilk): sometimes the brass ring isn’t just gonna be dangling out there for you. You have to ask for it.
Kenneth Scigulinsky (Virtus Funds): you are never set. You might have money for a lifetime. But you still have to figure out how to live.
Jeff Miller (Dash of Insight): investors will pay a high price for “free” information — as long as it makes them feel smart!
Michael Martin (Martin Kronicle): after six years of doing so, I can still trade without real-time quotes and a cable TV subscription. Sitting on my hands remains a very valid tactic.
Jeff Reeves (Investor Place): some things in life have a high valuation for good reasons, and sometimes it’s wiser to wonder what YOU are missing than to wonder what everyone ELSE is missing.
Dr. Goose (Limericks Économiques):
Try again, if at first you may fail;
Start your day with a shake made of kale;
If you’re shown to the door,
To open some more
Keep up with your network from Yale.
April Rudin (The Rudin Group): social media Is NOT A numbers game. It’s always quality of following versus quantity. You cannot deposit Twitter followers into the bank. Well, I learned that years ago but people are just beginning to understand…
David Schawel (Square 1 Asset Management): optimism is warranted as things are, in fact, improving economically.
Enis Taner (Risk Reversal): when it’s me vs. the smartphone competing for attention, the smartphone always wins.
Stefan Cheplick (StockTwits): the first bubble call is never the last.
Scott Redler (T3 Live): a process based on timeframe analysis trumps predictions without proper execution.
Stephen Weiss (Short Hills Capital): it is great investing in an environment where it is so easy to confuse a bull market with brains.
MicroFundy: when you think it might finally be the right time to fight the Fed, just remember the old saying…don’t fight the Fed.
NYT Fridge (8th Avenue): patience is indeed a virtue and life can be a lot of fun when the right person comes along for the ride.
Michael Batnick (The Irrelevant Investor): it’s okay to be an alpha atheist. Beta is fine for 99.9% of investors.
Zachary Shrier (Shrier Wealth Management): having a daughter makes a guy feel like a richer, smarter, cooler Elon Musk.
The Basis Point: mortgage securitization will take at least a couple more years to thaw out. As such, mortgage consumers will continue to see portfolio lenders (aka retail banks) offer more competitive rates than correspondent lenders (aka mortgage banks), especially for loans above the Fannie/Freddie limit of $417,000.
Matt Goldstein (New York Times): you cant write enough stories about Herbalife.
Teri Buhl (Market Nexus Media): it’s nice to see the DOJ beat the same drum as I have for three years on the fraud that JP Morgan covered up for Bear Stearns mortgage traders.
Kevin Ferry (Contrarians Corner): bull markets breed geniuses.
Wu-Tang Financial: fixed income and equity fund flows rule everything around me (and asset prices too). (editor’s note: dolla dolla bills, y’all)
Heidi Moore (The Guardian): how you do anything is how you do everything– unless you’re in Congress, where you can do nothing at all, especially when it comes to a five-year-long unemployment crisis hurting tens of millions of Americans.
Jacob Wolinsky (ValueWalk): I learned – once again – don’t bet against the Fed, and throw in the ECB and BOJ while you’re at it.
Cathleen Ritt (Mob Wives): when it comes to the Yale Model, the only people that know what they’re talking about are David Swensen
Jim Binder (Options Industry Council): Fox Business is still on the air and there’s a little shop in Carroll Gardens that sells artisanal, gluten free Bitcoins.
Tim Knight (Slope of Hope): what the Fed wants, the Fed gets, and the only bear markets that are allowed to happen are those in which the Fed really has no interest (cough precious metals cough).
Justin Frankel (RiverPark Funds): investors appreciate lower fees, less complexity, more transparency and more liquidity, and that with the right partners you can make good things happen!
Aaron Task (Yahoo Finance): all that REALLY matters is your health and your family. I know that’s not particularly witty or original but it’s also undeniable.
Brian Kelly (Kanundrum Capital): a bear-suit gets HOT when Gentle Ben stokes the fire.
Fightin’ Joe Donahue (Upside Trader): most people generally suck my ass even tough the S&P was up like 29%.
Dan Emmons (Coder Trader): regardless of price, the value of $BCOIN will always be verifiably worth more than a #timestamp through proof of work. (editor’s note: I’m #timestamping this prediction, we’ll revisit at year-end)
Jay Yarow (Silicon Alley Insider): Apple was ready to move on past Steve Jobs. It may have seemed like a down year for Apple for casual observers, but in three years I think we’ll see this as a transformational year for Apple when it moved to its next era.
Foster Kamer (Complex Magazine): Henry Blodget is very, very particular about who does and does not watch him piss, god bless him.
Brian Lund (Ditto Trade): Vampires, zombies, and financial news personalities have all jumped the shark.
Mina Kimes (Bloomberg): “tiny taper” isn’t a nickname for Martin Scorsese.
Turney Duff (The Buy Side): when you’re over forty and you get a physical, you should select a doctor with small fingers.
Todd Harrison (Minyanville): remain humble or the market will do it for you.
Cardiff Garcia (FT Alphaville): it’s rare and lucky to have relationships, whether familial or platonic or romantic or professional, that aren’t governed mainly by power dynamics. (I’m not sure where this lesson came from, but a reasonable guess would be the final season of Breaking Bad.)
George Acs (The Acs Man): drones will be the next big thing to secure Amazon’s non-profit status.
Matthew Boesler (Business Insider): you just can’t argue against the case for gold!
David Collum (Cornell): for the really pressing ethical questions I should just #askJPM.
Todd Sullivan (ValuePlays): It doesn’t matter how good or how bad of a day my portfolio is having. Everyday at 3pm the kids start getting off the bus and they don’t care either way, they love me the same no matter what.
Howard Lindzon (Coronado Fed): Shit… I sold early.
Thanks guys! Love you all!
What did we miss? What did you learn in 2013? Who had the best lesson of all in this post? Tell us below!
Full Disclosure: Nothing on this site should ever be considered to be advice, research or an invitation to buy or sell any securities, please see my Terms & Conditions page for a full disclaimer.
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.