The year is winding down, people are getting ready for the holidays, and I am working on my last few columns of the year for Bloomberg View. Since my first column on Nov. 4, you have been very welcoming and encouraging and stimulating. I am thrilled with this platform and its readers; Teaser: I have some pretty wicked things planned for 2014.
In the meanwhile, I have a few random thoughts that I like to share every now and again. These are 10 things that have me wondering, thinking and, generally, curious about.
1. The other day, I heard someone describe incoming Federal Reserve chairman Janet Yellen as “Bernanke 2.0.” But that’s really missing the bigger picture, isn’t it? If that's truly your view, wouldn’t it be far more accurate to call her “Greenspan 3.0?”
2. SAC: I am astonished to hear people describe the prosecution of Steve Cohen’s SAC Capital as a witch hunt. The nicest thing I can say about SAC is that its supervision is a gnarled mess of poor oversight and failure. Add to it the incredible pressures applied to its traders, and voilà! -- you get lots of insider trading. How much? Prosecutors have won 77 of 87 cases they have brought in the Southern District of New York. Witch hunt? Some folks just don't care for the rule of law, I guess.
3. My annual Predictions for the coming year, 2014 edition:
- Dow Jones Industrials: No idea
- S&P500: Why are you asking me?
- 10 Year Bond: Could not fathom a guess
- Emerging Markets: Who knows?
- Fed Fund Rates: Haven’t a clue
- GDP: Yes, we will probably have a GDP
- Unemployment: Thhhhpppptttt?
- ECB Rates: $%^&*!
- 2014 Election outcome: How the heck should I know?
That’s the most honest set of predictions you will read this season.
4. I will make one prediction: The early forecast about holiday shopping will be wrong; the season will be better than worst expectations, perhaps not living up to the most optimistic ones.
5. The death of contrarians has been greatly exaggerated. The reason is that the crowd is the market for most of any cycle. You cannot be contrarian all the time, otherwise you end up simply fighting the tape the whole way up (or down), therefore being wildly wrong.
That said, there are small moments of intense uniformity of thought and widespread agreement in markets. That is when contrarians get fed. This is a state of mind that is exceedingly difficult for you social herd animals to inhabit. If it feels good and right, it's probably not that terribly uncomfortable contrarian moment.
6. Is 2014 the year the Great Bond into Equities Rotation occurs? Equity bulls have been making this claim/prediction/hope for several years now, to no avail. Might 2014 be the year this finally comes true? I suspect they have a better shot this year than previously.
7. The Chinese tried to steal Dupont’s genetically modified corn? I say, let's give it to them as the ultimate Trojan Horse: Let the Chinese fill their supermarkets with high fructose corn syrup and ruin their internal combustion engines with modified corn ethanol. If we can figure out some way for Iowa to corrupt their political process, that would turn it into a prefect trifecta!
8. What books are you spending time with over the holiday break? I always bring a big stack of vacation reading, even if I don’t get to it all. This year, I have:
- How Music Works by David Byrne
- The Story of Sushi: An Unlikely Saga of Raw Fish and Rice
- The Success Equation: Untangling Skill and Luck in Business, Sports, and Investing
- Talent is Overrated: What Really Separates World-Class Performers from Everybody Else
- Blockbusters: Hit-making, Risk-taking, and the Big Business of Entertainment
- Big Data
- A Little History of the World
And one work of fiction:
If I am lucky, I will finish three or four of them.
9. I am going to slap the next person I hear say, “It’s a stock picker’s market”
10. I am incredibly grateful for having been born into an era of great change and wonder. The things we have witnessed in the past half-century, and especially the past decade, are simply mind-boggling. I am continuously thankful for my good fortune and good run of luck. I am also always mindful of the Solomonic wisdom that “This too, shall pass.”
Enjoy your holidays and vacations!