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Experts - Has your view changed?
Old 06-13-2010, 06:39 AM   #1
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Experts - Has your view changed?

I find that now, when I watch or read financial information from the experts, I tend to discard most of it. All I can think is that we just went through the most significant financial event since the great depression and ,arguably, no one saw it coming. (I know the permabears, did but a stopped clock...). They all knew everything, then it hit and they all went scrambling - now they again are all knowing.

My feeling - I'm as smart or smarter than most of them and I know that I don't know much. It's hard to take anything they say seriously, at least for me.

How about you?
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Old 06-13-2010, 06:48 AM   #2
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Agreed- I'm no expert, but I had a strong gut feeling at the start of 2009 that I should really abandon my buy and hold strategy and get out. Unfortunately I remained disciplined and paid dearly for it. I managed to stay in and get back to even but again my gut started telling me that things aren't right back in September so I've been on the sidelines ever since.

The experts like to try and explain why the markets react the way they do....but they really are just making guesses that aren't much better than yours or mine.
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Old 06-13-2010, 06:51 AM   #3
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Quote:
Originally Posted by Mysto View Post
My feeling - I'm as smart or smarter than most of them and I know that I don't know much. It's hard to take anything they say seriously, at least for me.
Predicting the future is hard, borderline impossible. And because I didn't expect perfection from the "experts" heading in, my views of them haven't much changed now. And while I may be as smart as any of them (or not), I don't spend all of my waking hours researching the specific things they dig into. So they will often know a lot more than me, and their knowledge is always useful, even if their conclusions aren't.
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Old 06-13-2010, 06:57 AM   #4
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It didn't take long to figure out that most of the so-called "experts" are full of $hit.

What you see on the financial networks are just "talking heads" trotted out by finance TV just to fill the airtime. Most of them just parrot conventional wisdom without offering any deeper analysis. And most of them can't even see what is right in front of their face let alone predict the future.

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Old 06-13-2010, 07:01 AM   #5
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There is an interesting article on msn.com this morning that I believe relates to this post. See Irrational US investors will always lose to Wall Street - MSN Money.

The title and subtitle says, "American investors: Predictably stupid.
Not only are our brains irrational, but our behavior is easily predicted by wolves on Wall Street, who are only too eager to lead us sheep to the slaughterhouse."

I am not saying I agree or disagree with the article. But I am starting to see more people questioning stock market investments and strategies. Makes me even more confused on the best thing to do at this point.
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Old 06-13-2010, 07:38 AM   #6
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Actually, what I have noticed is the influence on the media. CNBC is really bad about this, but even Bloomberg does it. They pick wh to focus on depending on which direction the herd shifts towards, and they do it in lighting speed. If the market is up for a few days in a row, you will generally see interviews with the people who are always optimistic or just happen to be now, and vice versa.
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Old 06-13-2010, 07:52 AM   #7
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Makes me even more confused on the best thing to do at this point.
So you have succumbed to sheep mode. That's too bad.

For a take on the article from folks who are not confused, check out this link:
Bogleheads :: View topic - What do you think about this article by Paul B Farrell?
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Old 06-13-2010, 07:59 AM   #8
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My view has changed a long time ago. Can't believe everything you say and hear.

I think the situation is the "experts" can only be accurate in generalities (such as in the long run ...), but that's boring.

It's kind of like sports. Before the superbowl, it's fun to say "I know this team will win, for these reasons ...." But who really knows for sure what will happen.
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Old 06-13-2010, 08:01 AM   #9
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Paul B. Farrell has seen disaster looming around every bend for the past 20 years. He's not a permabear, he's an Armageddonist.
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Old 06-13-2010, 09:42 AM   #10
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The experts that have worked for me have been along the lines of Bogle, Bernstein et al. Set an asset allocation that works for you and reset it when it gets too far out of line (you decide how far is too far). Then go live your life. I've run my numbers through every sort of simulation I can think of and they uniformly say that even the great depression would have been survivable. A great thundering voice from above telling me "YOU'LL BE FINE _ DON'T WORRY" would be nice but short of that, I'll stick to what I'm doing. Incidentally, I've noticed life is much nicer since I stopped watching MSNBC
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Old 06-13-2010, 10:04 AM   #11
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I'm convinced that no one and I mean no one has any idea of what's going to happen in the future as far as the markets go. I always find it funny when one of the TV programs brings on a bunch of experts and they can never agree. I think, I think, I think is as much as they or anyone else knows.
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Old 06-13-2010, 10:17 AM   #12
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Old 06-13-2010, 10:27 AM   #13
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Quote:
Originally Posted by Mysto View Post
I find that now, when I watch or read financial information from the experts, I tend to discard most of it. All I can think is that we just went through the most significant financial event since the great depression and ,arguably, no one saw it coming. (I know the permabears, did but a stopped clock...). They all knew everything, then it hit and they all went scrambling - now they again are all knowing.

My feeling - I'm as smart or smarter than most of them and I know that I don't know much. It's hard to take anything they say seriously, at least for me.

How about you?
I think they are in the business of making money. So, I tend to take whatever they say with a grain of salt.

Personally I am in the "establish an asset allocation, hold, and rebalance as needed" camp and my portfolio has a pronounced Bogleheadish flavor, with broad index funds, etc. The pronouncements of so-called financial experts have not inspired me to buy or sell.
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Old 06-13-2010, 10:50 AM   #14
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When I watch CNBC and see 2 "experts" looking at the same set of data and somehow coming to diametrically opposed conclusions, then I know that these so-called "experts" know as much about the future as I do...
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Old 06-13-2010, 10:56 AM   #15
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Originally Posted by brewer12345 View Post
Actually, what I have noticed is the influence on the media. CNBC is really bad about this, but even Bloomberg does it. They pick wh to focus on depending on which direction the herd shifts towards, and they do it in lighting speed. If the market is up for a few days in a row, you will generally see interviews with the people who are always optimistic or just happen to be now, and vice versa.
It's really bad! And CNBC is really bad about it. It becomes so annoying. Well, I essentially quit listening to CNBC a while ago. I mute it to see the indices, etc. and then turn it off.

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Old 06-13-2010, 11:26 AM   #16
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I consider the talking heads to be the same as weather forecasters. And they are about as useful to my portfolio...
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Old 06-13-2010, 11:41 AM   #17
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Actually, weather forecasters do pretty good compared market gurus. I like to read financial porn, but when it comes down to it I go to the source I know can trust - the magic 8 ball.
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Old 06-13-2010, 11:52 AM   #18
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I find that now, when I watch or read financial information from the experts, I tend to discard most of it. All I can think is that we just went through the most significant financial event since the great depression and ,arguably, no one saw it coming. (I know the permabears, did but a stopped clock...). They all knew everything, then it hit and they all went scrambling - now they again are all knowing.
Ironically lots of people saw it coming but didn't believe the results would be so bad.

Even the guys who predicted the mortgage implosion realized that their bets were only going to pay off if AIG and Goldman Sachs had the money to pay up. The shorts could've let their investments go even higher, but they were scrambling to sell off their positions before their counterparties went bankrupt.

There are lots of good books covering the past couple of years, but Michael Lewis' "The Big Short" describes the epiphany that swept through the major investment houses just as things started to unravel. What I learned is from reading it is that I only would've seen it coming if I'd been part of the industry, and that the prediction was irrelevant-- a good asset allocation can get through the worst of it.

I've also learned not to go with my "gut"! One of our biggest strengths of getting through the last couple years has been an AA plan that helped us figure out when to rebalance instead of agonizing over a bunch of entrails. If your "gut" is telling you to get onto the sidelines, what it's really telling you is that your AA was wrong for you in the first place.
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Old 06-13-2010, 11:55 AM   #19
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Actually, weather forecasters do pretty good compared market gurus. I like to read financial porn, but when it comes down to it I go to the source I know can trust - the magic 8 ball.
Yes! Weather forecasting these days is pretty darn reliable! What a difference compared to 30 years ago.

They just needed really big computers to run the models with enough detail, plus collect massive amounts of weather data as input.

Somehow, that is just not going to work with finances/investing because millions of humans (and their computers) participate in a multi-level feedback loop and you just can't model that! You can only guess....

Paying attention to macro conditions help make someone a better predictor, IMO, but I'm usually amazed at how much effort talking heads put into spinning the data to fit their preconceived view of the future, rather than refining their outlook. Human nature! But in this area, being stubborn can really cost you money!

Audrey
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Old 06-13-2010, 12:08 PM   #20
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Most of the talking heads are concerned with short-term market moves. I am concerned with owning companies, or in my case "the market", and benefiting from any growth and dividends. The guy running the local 7-11 or restaurant doesn't buy and sell their business every hour/day/week/month, because they are "owners", not gamblers traders.
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