I dove back 50 years to track down GDP growth vs. the consensus. It’s fair to say that more often than not the consensus missed its numbers, particularly on major changes in the economy. Players invariably wax overly bullish at cyclical peaks. Then take months before reforecasting and throwing in the towel.
My heroes are operators who do stand alone on their picks. Whether Nvidia or even General Motors, the gaps in numbers create comments like “Geez! Shoulda seen that coming!”
When I turned to technology stock premiums I was surprised to see how minimal they ran for decades before collapsing in a recessionary cycle. JP Morgan’s one-decision stock portfolio collapsed as readily as Ford and General Motors.
Anyone who paid more than 1.25 times the market for a growthie usually encountered troublesome downside when the business cycle peaked. Few recession resistant stocks. Utilities yielding over 6% can shine. Present cycle is no different with Microsoft fading while Duke Energy hangs in.
Conceptually, the market should be looked upon as a 3-ring circus. The animals rotate around the ring at different speeds natural to their conformation. A deer clocks faster than a bear or camel although all 3 are 4-legged beasts.
Citigroup, Goldman Sachs, and Lehman which struck out, were into high rise real estate which turned delinquent and fumbled into bankruptcy over a decade ago.
Perception was everything in 2009-’10. The wipeout in bank mortgage paper amid their rising delinquencies was
unexpected. It took hundreds of billions in Treasury and FRB assistance to keep our banking system afloat. Same ole, same ole in 2000, as well. Note the contraction was missed by The players as well as creditors.
The International Monetary Fund found their forecasts on international GDP growth so often missed their mark that they admitted their numbers were worthless and useless.
In the early sixties, I did take an interest in Cuba’s mess.
Thirty years later I learned that Castro was screaming at the Russians posted inCuba to launch their trained missiles on our mainland cities. The Russicans refused, but the world had drawn within an ace of obliteration.
I got lucky, but had programmed myself to win, concentrating on the here and now in space warfare. If I had bet on the eve of World War I, that the major powers would finally turn rational, I would have lost everything. Never ignore the centrifugal force of stupidity. Let’s remember Pearl Harbor (and go on to victory.)
On Old Wall Street, there were a handful of serious minded analysts who followed tech and the pharmaceuticals. I liked the chatter in gaming growth and later went for control of Caesar’s World but lost out. The cost of deal money, early sixties, hit 9 percent. Charlie Allen explained the impact
with its forthcoming birth control, bold play.
Most everything today looks overplayed and dangerous.
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