Wednesday, July 7, 2010

Bad Journalism and Bad Analysis

This is a video taken from MarketWatch of James Altucher who gives his reasons why the S&P500 will hit 1500.





While Mr. Altucher is entitled to his opinions, his analysis provides little context as to when this blessed event will happen. I don't doubt that at some point in time in the future the S&P500 will trade back to its October, 2007 highs above 1500. But when will that be? 5 weeks, 5 months, or 5 years? How long will I have to wait, Mr. Altucher? Will prices take off today and head towards 1500 or do we have to lose 15% first? And why stop at 1500?

This is just bad analysis -plain and simple - from an individual who (I hope) can do better than this.

I don't know Mr. Altucher personally, but I know of him from my days at TheStreet.com. At one time, he was a serious student of the markets having written several books about trading. He is a good thinker and maybe even an innovator, and this kind of boastfulness does not serve him well. It is too "Cramerish". It is too much like the man hawking some miracle tonic at the carnival. It provides little benefit for the serious investor.

To further my point, how credible could this analysis be from a person who espouses having the government buy 10 million S&P futures for 100 straight days?



This is just bad journalism and bad analysis.

11 comments:

James said...

I dont get it. You don't actually dispute any of my points. How can you then say "bad journalism". Its not even intended to be journalism.

Luv them Waves said...

James, the value of the piece for anything other than as a journalistic thought provoking article leaves something to be desired as far as I am concerned. If it is not intended as journalism then pray tell what? I agree with the criticism of your article for investing purposes.

Guy M. Lerner said...

James: it has to be journalism and of the hyperbolic type; I just don't see the value in making such claims

Knowing the passion you probably bring to your work, I just don't think you need to bring yourself down to the level of a tonic salesman or QVC infomercial

Anthony said...
This comment has been removed by the author.
Anthony said...

Well Guy, I've been watching your advice and comments over the past year and guess what, your commentary isn't exactly fully of insight either. Like missing something like 25% of the upside in the rally last summer.

Obviously, the real money here is not in following advice but instead selling it.

I don't think much of any financial journalism regardless. It's all a bunch of crap.

James said...

Well, I guess I'm trying to understand:

A) You don't actually make any case against any of my points. You just say "bad journalism". You say I'm boastful but I'm just making points about the market. Which (now I'll boast) have so far been correct.

B) A journalist reports the news. I'm a fund of funds manager and I run a VC fund. I'm being asked my opinion in those videos. Thats not journalism.

Guy M. Lerner said...

James:

The only case I am making against your points is that I think you can do better than that; there did not seem to be any value in your comments that the S&P500 was going to 1500 -it was boastful and sensational....once again, without the context of time there was little value in the statement

One question: is that all it takes to get investors in your fund of funds? Just make statements like that?

I would hope not....

Hey, I showed you genuine respect for the things you do and have done because I thought it was appropriate and I still do

James said...

Well, how about you actually respond to some of my points:

A) Valuations on 2010 earnings are well below historical averages
B) ISM leading indicators are showing expansion
C) Containerboard prices are rising, showing latent demand in shipping.

I had a few more but maybe start with those in order to demonstrate your claim of "bad analysis". Your claim of "bad journalism" wasn't appropriate since I'm not a journalist.

Greg Donaldson said...

James

I'm with you, as you know. The blog I posted today shows that the P/E maybe as much as 30% under where it should be based on core inflation. I see the same old doom and gloomers predicting the end of the world. I don't believe they understand much about economics. Money eventually absolutely has to leave zero percent rates of return. It is just a matter of time. When people realize that the economy is going to grind along and not fall to pieces, stocks will take off. thanks for your interview.

Greg Donaldson: www.risingdividendinvesting.com

Guy M. Lerner said...

James:

Do any of your points matter? Or are they reasons why the S&P500 should go to 1500? If we get to 1500, it will only be a matter of luck that your analysis will be associated with such a price move. Stocks could be cheap and the S&P500 could go to 1500 next month or 800 in 3 months.

And I think that is the point you are missing...Once again, is this the kind of rigorous analysis that sells your hedge funds?

About responding to your points specifically, I see no reason offering an opinion about those three points as I know little about the data so what would be the value in offering an opinion. They may be true but unlikely associated with SP500 going to 1500 (that is as far as I would go).

Guy M. Lerner said...

James:

1 more thing -- you made a forecast (S&P500 = 1500) and you have given your reasons (which are fine) but without any time constraints or without the context of time the forecast is meaningless

It is like saying, "the sun will come out". Yes, we know that. But a forecast is "the sun will come out TODAY".

There are two parts of any price chart: the y and x axis. You are only giving us the y part!