Skip to main content

Sound Advice: May 8, 2024

Wall Streeters Have Comments on Everything.  Ignore them.

In my early years in this industry, I had the good fortune to work alongside many extremely bright people.  They all had something to say, but one comment stood out: “You may be a fool, but you don’t need to prove it.”

Keeping that in mind, my daily reading of the silly noises coming from the exalted levels of the financial community always leads to amusement.  Whichever the medium, the outpourings, with rare exception, are embarrassments.

There’s certainly nothing wrong with commentary on daily markets or the economy, even though the ostensible reasoning may be questionable, but when the verbiage gets into thoughts about what lies ahead, that becomes a guaranteed minefield.

Here are some interesting quotes:

“Today’s market uncertainty is a reminder of the value of humility.”

How is that helpful?

“It does feel like an inflection point where things could go either way.”

Translation: The market could go up or down.  Shocking revelation!

The market could hit a new milestone if the Dow Jones Industrial Average reaches 40,000.  However, investors may want to brace for a market pullback and other uncertainties.

If 40,000 is a milestone, is 40,001 a milepebble?  Another version of “the market could go up or down.”

“Finally, the S&P 500 has hit escape velocity.  This is another big cap, liquid market which is at all-time highs. There is no overhead resistance.”

That comment was made on April 3rd, probably by someone based in Cape Canaveral. Over the next two weeks, the market dropped almost 5%. Failure to launch.

“The price it is trading at doesn’t make any sense, but price and value don’t have to be related in the short term.”

These comments are all very silly.  But it gets even worse.

Wall Street titles typically include examples such as Chief Portfolio Strategist, Director of Portfolio Management or Director of Technical Analysis, but here’s the winner:

Director of Predictive Analytics.

OMG!

 

N. Russell Wayne

Weston, CT

Any questions: please contact me at nrwayne@soundasset.com

203-895-8877

www.soundasset.blogspot.com

Comments

Post a Comment

Popular posts from this blog

Sound Advice: July 16, 2025

Fixed annuities are poor investments Fixed annuities are often criticized as poor investments for several reasons, despite their reputation for providing stable, predictable income.  Here are the key drawbacks and concerns:   High Fees and Commissions Internal Fees:  Fixed annuities can carry a range of fees, including administrative charges, mortality expense risk fees, and rider fees. These can add up to 2%–4% per year, significantly eroding returns over time. Commissions:  Sales agents and financial advisors often receive high commissions for selling annuities—sometimes as much as 5%–8% of the invested amount. This creates a financial incentive for advisers to recommend them, even when they may not be the best fit for the client. Comparison to Other Investments:  Mutual funds and ETFs typically have much lower fees and commissions, making them more cost-effective for long-term growth. Limited Growth a...
Post a Comment
Read more

Sound Advice: October 8, 2025

How many investors have outperformed the stock market over the last 20 years? Very few investors have outperformed the stock market over the past 20 years.   Data shows that only about 6% to 8% of actively managed equity funds in the U.S. beat the market over this period, with the vast majority—over 90%—underperforming the S&P 500 or equivalent broad indexes. Percentage of Investors Beating the Market Only 8% of equity funds investing in large companies managed to outperform the market over a recent 20-year span. About 94% of all domestic funds underperformed the S&P 1500 Composite Index from 2005-2024. Over shorter timeframes (5-10 years), typically fewer than 15-20% of fund managers beat the S&P 500, and performance persistence is rare. Why It Is Rare The S&P 500’s high returns have proven immensely difficult to beat, especially as indexing has become popular and markets have ...
Post a Comment
Read more

Sound Advice: January 15, 2025

Why investors shouldn't pay attention to Wall Street forecasts   Investors shouldn't pay attention to Wall Street forecasts for several compelling reasons: Poor accuracy Wall Street forecasts have a terrible track record of accuracy. Studies show that their predictions are often no better than random chance, with accuracy rates as low as 47%   Some prominent analysts even perform worse, with accuracy ratings as low as 35% Consistent overestimation Analysts consistently overestimate earnings growth, predicting 10-12%                 annual growth when the reality is closer to 6%.   This overoptimism can                 lead investors to make overly aggressive bets in the market. Inability to predict unpredictable events The stock market is influenced by numerous unpredictable factors, including geopolitical events, technological changes, and company-specific news.   Anal...
Post a Comment
Read more