This morning I chatted with an analyst I respect and admire, and we had a laugh about how wrong he has been about the recent rally in the canola market: “I’ve been way, way off on this one!” he said to me.
That’s what I admire about good analysts: they’re right more often than they’re not, and for the right reasons, but they’re not only willing to admit when they’ve been wrong – they’re willing to repeatedly stick their necks out be wrong again. Being willing to be wrong is a prerequisite for any analyst who wants to be worthwhile.
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This topic came up – because I raised it – with another analyst I was talking to today when we were discussing the topic of analysts who stick with safe and easy forecasts that are only slightly divergent – if at all – from what everybody already expects. What’s the point of those? Any analyst that has an incisive mind will be trying to call stuff before the turns occur, before the reversals, so being absolutely in-line with the existing wisdom of the street isn’t analysis. It’s just reportage.
So, with that excuse and licence laid out for you, I will offer fearless middle term market predictions, all of which will no doubt be wrong, but which will at least force you decide why I am an idiot:
1) The equity markets are topping: There is no excuse for the power of the recent stock market rallies around the world, which come in the face of dreary economic stats in the U.S. (Yes, slightly improved, but not robust), fragmentation in Europe with the Germans creating the conditions for a total Europlosion, and geopolitical tremors (Iran’s nuke program) suggesting a quake coming. The rally’s been impressive, as people have – ever the optimists – shaken off all their concerns. Well, who can blame them, because it’s been a dreary five years we’ve been living on Planet Earth. But my guess is that this rally has gone on too long, too far, and will get shmucked by reality sometime soon. (Why I’ll be wrong: I’m always wrong on trends reversing. I expect reversals when it would rational for things to turn, but the markets are a human, psychological thing, and go on and on and on well past the point at which they should have stopped, which is exactly what people say about my dinner conversation.)
2) The commodity markets will rally, taking over for the equity markets: Before an equity blowout, but during a subsidence, commodity markets will rally, maybe
