A Dozen Predictions from Tren Griffin for 2014


1. CNBC will continue to lose viewers by trying to make its programming similar to ESPN’s Sports Center, even though that approach is *exactly* what sends ordinary investors to their financial doom and *ensures* that ordinary investors will stop watching CNBC (i.e., the CNBC ratings death spiral will continue).

2. The Zero Hedge blog will continue to push people to buy precious metals even though it is particularly well qualified to tear apart the folly of speculation in precious metals and the promoters who profit from that speculation. In other words, for ideological reasons, precious metals promoters will get a “free pass” from Zero Hedge despite the fact that they are a natural target for the web site.  What other promoters get such a free pass from Zero Hedge?

3. Maria Bartiromo will continue to fawn over certain CEOs on Fox Business as long as they “make money” regardless of what their firms have done to “make” that money (e.g., the “Volker” legislation is evil since it gets in the way of “making money”).

4. Business reporters in general will continue to ignore the difference between revenue and profit and will talk generically about “making money.”   What business reporters say a company “earns” will mostly be revenue rather than profit, but that will not be made clear in the article.  Reporters will make no attempt to understand what “items” are actually being excluded from financial results or whether these “items” are excluded by the company every single quarter. Business reporters will continue to pretend that depreciation is not associated with a real cash expense paid up front when they use terms like EBITDA/OIBDA. Survivorship bias will continue to be a completely foreign concept to business reporters.

5. Sell-side Wall Street analysts will continue to put out highly fictional reports about the future performance of companies they cover (mostly motivated by a desire to obtain business for their investment bank in other areas like M&A). Can they repeat this performance? “A MarketWatch analysis reveals that the stocks that analysts hated the most a year ago produced spectacular investment returns in 2013. They beat the overall market indexes, and the stocks that analysts most loved, by a country mile.”

6. Analysts for Wall Street will continue their antics. For example, Piper Jaffray analyst Gene Munster will continue to do “channel checks” (the rumor is that he is so focused on channel checks that his friends and family will never let him use the remote control when watching TV with him). Maybe this year Munster will finally be able to do a channel check on an Apple TV.  Topeka Capital will continue to put absurd target valuations on stocks since it is the only way they can get some attention. Thankfully, Meredith Whitney is now running her own hedge fund and no longer providing any “analysis”/getting lucky once in a row.  Analysts will not forget: “If you’re a bull and you’re wrong, you’re forgiven. If you’re a bull and you’re right, they love you. If you’re a bear and you’re right, you’re respected. If you’re a bear and you’re wrong, you’re fired.”

7. The press will find people in the technology industry who have political views which do not even come close to representing the technology industry, but will claim that they are typical of the technology industry (i.e., stoking the fires of political polarization/generating click bait will continue to be “job #1” for the press). Of course, it is not possible to find a few people with odd political views in other industries like real estate, construction or manufacturing or the educational sector.  Not.

8. Economists will continue to make assertions about the economy without actually talking to *anyone* who actually runs a business. They will continue to talk extensively with each other in small warring cabals within the profession being careful to exclude anyone who is not “empirical” (the ultimate insult for a economist) from the conversation. The crew of economists who believe (1)  the economy is composed of perfectly informed rational agents and (2) the hard version of the Efficient Market Hypothesis, will continue living in their fantasy world.

9. Online options brokers will continue to advertise heavily to convince new people to trade options, including but not limited to at sports events and at stop lights, since their “clients/marks” will continue to get hurt financially and cease being clients/marks.  Online options trading firms face a shrinking supply of new muppets.  Given this problem they will likely attend “motivational” seminars for what Charlie Munger calls “compliance professionals” given by people like Jordan Belfort.

10. Bill Gross will continue to “talk his book” (just like everyone else, but his “book” is bigger than nearly everyone else). When Gross says publicly that people/firms should do X, he will be already fully positioned on X and will already be thinking about his next move (just like everyone else who is talking their book).

11. Warren Buffett and Charlie Munger will make zero short term predictions about the economy or interest rates.  None whatsoever. Even when they make long term predictions they will make fewer predictions than almost anyone, but bet big when they do.

12. People will continue to make predictions and muppets will believe them (especially if the person making the prediction appears highly confident).  As an aside, I am *highly* confident about each of these predictions.


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