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Southern Vanity
Last Updated on Monday, 23 August 2010 04:52 Written by Mike Keliher Wednesday, 11 August 2010 04:54
For two years I wrote a financial column for Southern Vanity magazine. In many of those articles I forecast future events. The accuracy of those forecasts was not a smoke and mirrors exercise. It was instead an example of viewing underlying data putting things in historical perspective and assigning probability to the likely outcome. Below are some of the more interesting ones.
Encountering a Bear
The column published at the absolute peak of the last bull market. At the time bullishness was rampant, the financial press giddy with new highs and the prospects of great prosperity since the Federal Reserve was cutting rates. As you will see, the column sported a picture of an angry bear and recommended the best time to get out of the way of the bear was “right now.”
Read Encountering a Bear.
Relying on the Fed
The column published in June 2008 addressing the Federal Reserve Chairman and the Secretary of Treasury’s claims that all was well. In fact all was not well. In the weeks and months to follow, the credit markets would collapse, major institutions such as Lehman Brothers, Merrill Lynch, Fannie Mae, AIG, General Motors, Chrysler, etc. would go under. The column presciently recommended caution in believing government propaganda.
Read Relying on the Fed.
What’s Priced in?
The column published in April 2008 addressed the Wall Street pundits’ claims that the potential results of a recession had already been “priced into the market.” The column suggested instead that what was “priced in” was a dramatic economic recovery. At the time the Dow was over 12,000 … on its way to under 7,000.
Read What’s Priced in?
Outside the Headlines
The column published in December 2008 addressed the bias in reporting financial news. Financial news headlines are prepared by those heavily vested in portraying a rosy picture. This column recommended looking at the data, not the headlines and noted “the credit problem cannot be fixed by a few interest rate cuts.”
Read Outside the Headlines.
What Boat?
The column published in July 2007 addressed the plethora of headlines touting record highs in 2007 for the Dow. The media crowed that the Dow has “closed higher than the day before an astounding 28 of 32 days.” The columnist reminded readers that the last such performance was in the late 1920s preceding the 1929 crash. As we saw in 2007 and 2008, history can be a very reliable indicator.
Read What boat?
