Calling Out The Cassandras
Elections come and go. But "expert" predictions? Endless
Friend,
One of the aspects of visiting my parents at their Spanish villa is the constant noise and argument - not so much from Mater and Pater - although Clan Lincoln can get into a barney with reflections in a mirror - but from the Screen of Death (SOD) lurking in the lounge.
The SOD gets turned on at the waking hour and switched off before bed. Sometimes, it shows sports, which is a good thing. Most of the time, it’s tuned to one of a myriad of 24/7 “news” channels, which is a bad thing.
Why so?
In short, the SOD is a day-long kaleidoscope of stories about people you will never meet, in parts of the world you will likely never go to, suffering fates that you have no control over.
Talking heads bicker back and forth about the latest "Catastrophe-of-Catastrophes"© before cutting to an advert about cat food or incontinence pads.
The SOD makes you feel sad. We act on feelings as much as logic. And, heaven knows, it’s been an emotional 2024 thus far.
Despite the omnipresent SOD, we somehow survived the UK and US elections. The sun continues to rise in the East. Piers Morgan is still wrong about everything. Jeremy Clarkson remains a latter-day farmer. Life goes on.
Gratitude remains the Attitude
As we hunker down for Christmas, as long festering family tensions explode over whether or not the brussels sprouts really have been overcooked this year, let us pause for breath. Whatever travails we suffer, we exist in the very best time ever to be a human being, in a part of a world that is generally the least evil. Millions would swap with us in a heartbeat, and appear to be doing so with consummate ease.
Unfortunately, as part of the Dying Legacy Media (DLM), the SOD has no time for gratitude, for reflection. The run up to Christmas is typically a quiet news period and nature abhors a vacuum. Thus the DLM will turn to its carousel of tired memes and tropes. It’s been a few months since a “married” TV presenter was revealed as having had homosexual affairs with minors. There must be a revelation or two coming down the line. Those blank pages won’t fill themselves. Note: the very day after I wrote that line Greg Wallace’s “story” broke. Go figure.
Back to the vacuum and the Comic Money Sections of what some folk touchingly still call “newspapers”. Over the next couple of months, filling the void, expect to find these full of “expert” predictions about what will happen to markets and the economy in 2025 (wow - twenty years since we finally won back the Ashes. Where have those two decades gone?)
That these experts get their calls way more wrong than right is apparently of no consequence. We must listen to them! They are, after all, experts.
"We have long felt that the only value of stock forecasters is to make fortune tellers look good. Even now, Charlie [Munger] and I continue to believe that short-term market forecasts are poison and should be kept locked up in a safe place, away from children and also from grown-ups who behave in the market like children."
Warren Buffett
According to my extensive research, the predictions are generally in the ratio of twenty “Bad Things Will Happen” to one “Things Might Pick Up”. Fortunately for you, Dear Reader, your correspondent is here to hold the Cassandras to account.
Here’s a beauty from Christmas two years ago:
Putting it politely, Mr Wilson was having a moment. In 2023, US equities enjoyed a total return, with dividends, of 20%1. Corporate earnings went up by 7.4%. To say that Mr Wilson’s prediction was merely wrong is akin to concluding that nascent birdman Icarus made a slight misjudgement around wings, beeswax, and proximity to the sun.
Will this stop Mr Wilson and his ilk from Cassandaring into 2025? Categorically “NO”.
Other examples are everywhere for those who care to look. You don’t, for instance, get to be the “world’s biggest wealth manager” without knowing your onions, without having the magic crystal ball. Except, well, no, apparently you do. Here’s another dud, this time from wealth behemoth UBS in August 2019, before the Wuhan Lab-Leak episode:
Since that Cassandric headline, The Great Companies of The World (GCOTW) have returned 62% all in, which is an annualised return of 9.7%2. Those are life changing figures for most of us. A pension fund invested in those Great Companies with a value, say, of £617,500 five and half years ago would be a seven figure sum now. That could be the difference between a dignified retirement, where the money outlives the people, and an undignified one, where you go cap in hand to the children for handouts (also known as: “I’d rather have root canal surgery without anaesthesia.”)
Let us hope that the majority of clients with UBS did not act on that nonsense. Some would have done, and now face having to work x number of years more than desired, because “Cassandra”.
Ignore the prognosticators
The moral of this Christmas story? As you sip the eggnog, ignore the prognogs. It’s all for the clicks, as the yoof say/said (I’m out of the loop. I’ll ask The Boy). Enjoy the company of those you love and cherish. Everything else can go to the hell, which, if you watch the SOD, presently seems to be our chosen destination. It isn’t and, once more, we must be grateful for that: this really is the best life. Embrace it.
Merry Christmas to you and yours. And, if you can, take the batteries out of the remote control.
Source: Dimensional Fund Advisors (sic). As measured by the S&P500, returns converted to sterling.
Source: Dimensional Fund Advisors (sic). As measured by the MSCI All Country World Index IMI, returns converted to sterling.