Wait – 2015 is already over? How the hell did that happen?
It’s been quite a year, even though it feels like it flew by in an instant. Let’s hurry up and preserve the lessons learned lest we forget them all as 2016 gets underway.
You’ve already heard enough from me this year, so now, with a little help from my friends…
In 2015 I Learned That…
Scott Redler (T3 Live): Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate
Phil Pearlman (Bank of the Ozarks): you surround yourself with extraordinary people you adore and then you give ’em all you got.
Ivan the K (Finance Twitter General Manager): Taylor Swift is a more effective corporate activist than most hedge funds.
J.C. Parets (All Star Charts): your future hasn’t been written yet. No one’s has. Your future is whatever you make it. So make it a good one.
Howard Lindzon (StockTwits, Social Leverage): if a bull market/ boom goes on long enough you end up in business with people you would never do business with.
David Blair (Crosshairs Trader): there is indeed always a flat market somewhere.
Greg Harmon (Dragonfly Capital): in flat markets, your own sentiment clouds what you see. If you look for bearish signals you find them, and if you look for bullish signals you find them too.
Michael Batnick (Irrelevant Investor): annual returns presented without comments make people very angry. And if there’s a movie you want to see, make sure to do it before Neil deGrasse Tyson spoils it.
Jim Lebenthal (Lebenthal Wealth Advisors): investing requires the courage of your convictions. You can’t be blown this way and that by whatever style (or fad) is prevalent. More than ever, you have to believe in yourself, especially when few others seem to. It is mandatory to good investing that you do so.
Jay Yarow (Business Insider): you should love what you do rather than do what you love. A lot of people say, “Pursue your dreams/passions.” I think successful people don’t do actually do that. Instead they fall in love with what they’re doing, which is much more important.
Brian Shannon (Alpha Trends): the market still doesn’t care about my opinion and that “news” is nothing more than “noise” Only Price Pays! It really is a philosophy which doesn’t change with the calendar.
Alex Fitzpatrick (TIME): I have much, much more to learn.
Roben Farzad (Full Disclosure): with the help of hours of psychological counseling and transcendental medication, I finally mustered the courage to tell my parents that I was not a LinkedIn Influencer. We are no longer talking.
Pierce Crosby (StockTwits): there is a characteristic difference between those with power and those without, that difference is usually perception.
Allison Schrager (Quartz): we’ve reached peak nudge and low investment fees aren’t everything.
Bonnie Baha (DoubleLine Capital): we should not underestimate the Fed’s capacity for single-mindedness. The year 2015 will go down as the year in which Janet fearlessly put the brakes on an economy whose engine was already running out of gas. Until December, such a thing seemed very unlikely to me.
Mark Dow (Behavioral Macro): with age, foresight improves, hindsight deteriorates
Bill Winterberg (FPPad): you can’t bounce ideas off an algorithm; the conversation is pretty one-sided and one-dimensional.
Daniel Crosby (IncBlot): tedium is just as behaviorally dangerous as volatility.
Mr. John Flowers ( MSNBC, McSweeney’s): modern romance means a couple walks up to you, moments after you’ve proposed to your girlfriend, saying “We took some pictures of The Big Moment with our drone. Would you like us to send you copies?”
Steven Spencer (SMB Capital): traders should trade. investors should invest.
Fightin’ Joe Donahue (Upside Trader): organic isn’t everything its cracked up to be.
Linette Lopez (Chief Steakhouse Correspondent, Business Insider): you drive in a parkway, you park in a drive way, but in a hedge fund parking lot, you get slaughtered.
George Pearkes (Bespoke Investment Group): trends are hard to predict: the enduring weakness in commodities, the pause in the buck’s rally, the steady expansion in the US, or the move wider in credit spreads; many investors have tried to catch (or jump on) these falling (or rising) knives this year and gotten sliced to bits.
Sean McLaughlin (StockTwits): the only true edge is buying power.
Greg Guenthner (Baltimore Police Department): Bill Ackman, Warren Buffett, David Einhorn, and Carl Icahn are a bunch of mouth-breathing cretins who wouldn’t know a good investment if it slapped them in the face — but the rest of us know exactly what we’re doing out there.
Justin Frankel (RiverPark Funds): Success is often the confluence of skill and timing, but it rarely happens without a little luck. That’s why you have to pay it forward.
Julie VerHage (Bloomberg Business): just because your portfolio did well in 2014 doesn’t mean it continued to outperform in 2015. Same goes for next year.
David Snowball (Mutual Fund Observer): in the battle between a sensible strategy and a senseless market, the market wins (for now). And the longest 3 seconds in sports is when your kid is circling under a fly ball.
Chris Kimble (Kimble Charting Solutions): oil can have its biggest 18-month decline in history (-66%) and not impact stocks, so far.
Matt Klein (FT Alphaville): the big Fed hike so many people were excited about was already priced in by the time it happened.
Joshua M. Brown (TV Personality, Emotional Support Animal): I miss the good old days, when gasoline was expensive, Adele was contained and the scariest thing politically was Herman Cain’s economic plan. Also, I learned Carrie Fisher was still alive, congrats on that.
David Schawel (New River Investments): the “high” in high yield is finally starting to make sense.
Cathleen Ritt (The Uncorrelated): I learned from Ellen Pao that if you want to get promoted, don’t sleep with your married colleague.
James Cook (Business Insider Europe): editors don’t have to know everything, and it’s fine to admit that you’re not an expert in what a writer is covering. Someone told me a long time ago that if you edit other writers, you shouldn’t expect to know their domain better than them all the time, but I dismissed it straight away. One thing I learned this year is that there are some really smart writers out there who know a hell of a lot more than I do.
James Wolinsky (Value Walk): unsustainable things can last much longer than you think they can – even if you have no leverage. Ultimately, the market is the judge and when Ben Graham said in the long run, he meant longer than most people have the stomach for.
Wesley Gray (Alpha Architect): being an active value Investor is a one-way ticket on the pain train express.
Patrick O’Shaugnessy (Investor’s Field Guide): being a value investor in the F.A.N.G. era is no fun at all.
Jeff Miller (A Dash of Insight): all products, from biotech to banjos, are mysteriously dependent upon high oil prices. Services, too.
Larry McDonald (SocGen): in measuring impact on the U.S. equity market, the $3.6T of global debt tied to the energy sector trumps the “benefit” of lower oil prices to the U.S. consumer and economy.
The Fly (iBankCoin): savings from cheap gasoline vanish into thin air.
Barry Ritholtz (North Shore, LI): being patient as an investor, is much, much harder than it sounds.
James Osborne (Bason Asset Management): sometimes the hardest thing that can happen to your portfolio is nothing.
Michael Santoli (CNBC): markets don’t care about our daily need to dramatize them. And that politics can remain irrational longer than I can remain interested.
Nick (Barbarian Capital): flash crashes are less scary if you put in your buy limit orders ahead of time.
Kid Dynamite: You don’t have to argue with idiots… as G.B. Shaw said, “never wrestle with a pig: you get dirty and besides, the pig likes it”
Mary Childs (Financial Times): Oprah was right. If you talk about something long enough, envision it, and believe it hard enough, it comes true — like the Fed raising short-term interest rates, and also bond market liquidity.
Lady FOHF: everyone still thinks they are smarter than the crowd and that very few truly are. The end of a cycle sees crowded trades being cleaned out and it’s those investors who are disciplined enough to walk away and leave the last few cents on the table who avoid getting caught. On a personal level I learned that persistence and developing strong relationships pays off in the end, though perhaps not in the way you might expect.
Max Keiser (The Keiser Report): bankers who don’t want to admit they missed the bitcoin revolution refer to the blockchain instead.
Jake (EconomPic Data): one advantage of being an individual investor is having the ability to hold very different views than “experts”. In 2015 I learned there is rarely one absolute truth to any argument. Except in the case of kale… which tastes like poison and gives you gas.
Jason Zweig (Wall Street Journal): oil is even more dangerous when it implodes than when it explodes. And gold bugs become surprisingly tetchy when you call it a “pet rock.”
Frank Zorilla (Zor Capital): investors continue to chase what was hot just to drop it like it’s hot the minute it has the inevitable, natural pullback.
Tren Griffin (25iq): I learned again, from experience, that people don’t learn from experience.
Russian Bear (Artko Capital): apparently losing your shirt in sub prime debt is still cool.
Noah Smith (Bloomberg View, Stony Brook University): a “national conversation about race” is not necessarily something you should wish for.
Dan McConlogue (Ritholtz Wealth Management): there are really only 3 tradable security asset classes: equities, fixed income, and cash. Every derivative off those is a form of marketing.
Tim Knight (Slope of Hope): Karma is real, and Martin Shkreli is absolute living proof of this now-irrefutable fact.
Larry Swedroe (Buckingham Asset Management): One quotation often attributed to Einstein is that there are only two things that are infinite, the universe and human stupidity. He missed one. The ability of active managers to come up with new explanations (excuses) for why they failed this year and why next year will be different (but it never is).
Brendan Ahearn (Kraneshares): the most underestimated catalyst in fund flows is China’s inclusion into global indexes.
(editor’s note: deducting 10 points for talking your book, Brendan)
Brooke Southall (RIA Biz): nothing is much more personal than personal finance. We all live with an embarrassment of riches or an embarrassment of poverty — and often both in the same day.
Zachary Shrier (Shrier Wealth Management): there are stories about what happened. The combination of ZIRP, leverage, retail money, and “toll roads.” It’s true. All of it.
Peter Boockvar (The Lindsey Group): without QE from the Fed, stocks can go up and down.
Charles Sizemore (Sizemore Insights): a high debt load can turn a safe, stable investment into a very unsafe, unstable investment. Also, if success comes too soon or too easily, you cherish it a lot less and it slips through your fingers a lot easier. And a good client is more like a partner than a customer.
Todd Harrison (Minyanville): the word “community” has been completely bastardized. Despite an overt reach for ‘followers,’ ‘friends’ and ‘connections’ in the realm of social media, individuals have become increasingly isolated. I believe this will revert back to ‘human connectivity’ in the years ahead; not only a return to relationships but the ability to realize a return on relationships.
James Chanos (Kynikos Associates): what rolls-up, can roll-down. And that a platform is a location, not a strategy.
Morgan Housel (Motley Fool): finance bloggers continue to put out amazing, thought-provoking content for free. The quality has never been better. If you explained to investors 20 years ago the kind of quality analysis you could read for free now, it would blow their minds. It’s such a cool thing that we sometimes take for granted.
Tony Isola (A Teachable Moment): I know even less than I thought last year.
Simone Foxman (Bloomberg): just because a price is unsustainable doesn’t mean it can’t be sustained. (Oil, anyone?)
Tom Brakke (Research Puzzle): one new experience can have the power to change a long-held perspective.
Mark Yusko (Morgan Creek Capital Management): trying to catch falling knives always results in lost fingers… Better to let the knife hit the floor, bounce around a little and when it stops moving go pick it up. Also, John Burbank’s favorite saying “price is a liar” has been proven once and for all and has actually been exacerbated by the rise of the machines (algos & HFT) such that prices moves from extreme to extreme, rarely spending any time around fair value.
Jane Wells (CNBC): speaking plainly and calling out b.s. Trumps making sense.
Shane Parrish (Farnam Street): the best way to create free time and reduce stress is to make better initial decisions.
Nihon Cassandra (Cassandra Does Tokyo): the probability of Dystopian outcomes, though still far out on the tail, inched higher. 🙁
Shirl Penney (Dynasty Financial Partners): I learned, at the welcome reception for the Investment News 40 under 40, that the recognition list included some of the top leaders in the industry…and Josh Brown!
Jonathan Wald (CNN): women always figure out the truth. Always.
Andrew Thrasher (Financial Enhancement Group): it’s equally important to do the necessary research and analysis for a trade but having conviction and size can play just as vital of a role within a portfolio. It can be frustrating to get a trade direction right but now have enough size behind it. I also learned that I’m terrible at hiding my phone when checking Twitter while talking to friends, family, and especially my wife.
Ivanhoff (StockTwits): my best swing trades usually become profitable almost immediately after my entry.
Nancy Miller (NexChange): In 2015 I Learned That most people don’t know how to spell millennial.
Jesse Livermore (Philosophical Economics): tech investors that were bullish on Amazon at the December 1999 top were on to something! A 7 bagger over the next 16 years–13% annualized. Sometimes in markets, you get what you pay for.”
Druce Vertes (StreetEye): unicorn valuations are actually denominated in Schrute bucks. I’ll give you a billion Stanley nickels to never hear the word ‘decacorn’ again. Overhyped: 25bp rate hikes. Underhyped: $40 oil. Oil prices, not Star Wars, directly broke the Soviet Union, and very unstable places and people are going to feel the big hurt.
Carl Richards (Behavior Gap): guessing is better forecasting. At least that way we’re all being honest about it!
Todd Sullivan (ValuePlays): there is no joy in this world greater than what a parent feels when their child accomplishes something they’ve worked hard for and their first reaction is to share it with you.
Ryan Detrick (See It Market): just because commodities were down four straight years, that doesn’t mean they can’t crash in that fifth year.
Jim Bianco (Bianco Research): when explaining the political preferences of American voters there are those that say they do not know and those that lie.
Blair Duquesnay (Thirty North Investments): anyone who has ever purchased Apple stock is an investing genius who doesn’t need an advisor, and of course they knew exactly what was going to happen to Apple’s share price in advance.
Robert Seawright (Above the Market): Hell is having your own way and being stuck with it.
Julian Hebron (The Basis Point): certain big banks are smarter than critics think, but the smarter they get, the better they are at marginalizing their smart people. Now many of those smart people helm fintech startups, and the cycle begins anew.
Tracy Alloway (Bloomberg Business): Minsky is always in danger of having a moment.
Joe Fahmy (Roadie, Guns n’ Roses): 90% of being an economist is fighting off all the women.
Jon Boorman (Alpha Capture): Trump is serious.
Eddy Elfenbein (Crossing Wall Street): if something’s clear on Wall Street, that means you missed it.
Michael Kitces (Nerd’s Eye View): when it comes to portfolio risk management, stop loss orders may be even worse at downside protection for ETFs than they are for stocks owned directly (not that they’re much good with stocks, either).
(editor’s note: f***in’ Kitces sneaking in links to his blog, LOL)
Michelle Celarier (New York Post): Fannie and Freddie didn’t need that $187 billion bailout in 2008, and conservatorship was a fiendish plot hatched by Republicans, then embraced by Obama, to kill them (and maybe our housing market).
Brian Lund (The Ticker Tape): if your work consists of numbers and data, find some time for art. Put down the charts for a few minutes each day and read a poem, look at a painting, or listen to some classical music.
Scott Bell (I ♥ Wall Street): if it doesn’t make absolute sense, don’t do it. You’ll save yourself a lot of heartache and expense waiting until you have that kind of clarity.
Doug Kass (Seabreeze Partners): The Market Has No Memory from Day to Day and that Risk Happens Fast.
Stephen Weiss (Short Hills Capital): valuations driven by hype are like sugar highs; tastes great but then you crash.
Mike Murphy (Rosecliff Capital): I’m truly a contrarian investor…and I see massive opportunities in Venture Capital and private companies right now. Bring on all of the “Death of the Unicorn” stories!
Jeff Macke (America’s Sweetheart): you shouldn’t bet 30% of your hedge fund on one pharma stock and Greece still doesn’t matter. The good guys probably all cheated and we stopped caring. 2015 was a fever dream mash-up of previous emergencies. We’re all just killing time until Taylor Swift and Ivanka Trump are old enough to fight for the Presidency.
Carmine Pirone (Cramer’s Shirt): I clearly missed the class in college that covered sound Fed policy and oil prices that everyone else on Twitter took.
Sapna Maheshwari (Buzzfeed): People are more willing than ever to pay companies something for nothing. JustFab and Fabletics have made a booming business out of charging people’s credit cards on a monthly basis, whether or not customers order new workout clothes or shoes. (Handy, Gogo and lots of other companies do similar versions of this.) Snapchat started charging for replays of snaps. Cards Against Humanity literally sold $5 worth of “nothing” to more than 11,000 people on Black Friday and brought in more than $70,000! You could even include the whole idea of “acqui-hiring” in Silicon Valley under this lesson — at least the ones where the eye is purely on the talent, and not at all on whatever app or website is getting purchased for millions. Clearly, buying nothing for something is hot right now.
Chess (chessNwine): the crude oil market can remain irrational longer than the New York Mets’ World Series bid can remain realistic.
Aaron Klein (Riskalyze): on a scale of 1 to 99, Donald Trump’s Risk Number is 211. And some people apparently want that in a President.
Nick Murray (Simple Wealth, Inevitable Wealth): this great bull market is much younger than I (or anyone else) had previously suspected. This epiphany dawned when net equity liquidations spiked to 2008-09 levels during the August correction — the first in four years and an even milder one than the annual average since 1975 (12.4% vs. 14%). If there’s still that much potential for existential panic lurking in the collective lizard brain after six years, this bull market is — worst case — in the top of the third inning. It can’t even begin to top out meaningfully until all the knuckle-draggers are slobbering in unison: “Buy the dips.”
Ben Carlson (A Wealth Of Common Sense): as technology improves, people’s lives get better and become more efficient, but it also becomes easier to complain about everything else. So as Louis CK puts it, “Everything’s amazing and nobody’s happy.”
Bill Singer (RRBD Lawyer): Greece left the Eurozone; China landed hard and crashed the world economy; oil firmed at $65, $55, $45, and $35 a barrel; Gold exploded past $2,000 an ounce; Wall Street analysts correctly predicted six market corrections and six Bear Markets; the New York Mets re-signed Daniel Murphy and Yoenis Cespedes, and John McCain was not a war hero.
Ari Wald (Oppenheimer Asset Management): although dismissed by many pundits, momentum still works.
Izabella Kaminska (FT Alphaville): This year I learned that digital liabilities — such as legal risk associated with data loss, cyber hacking, privacy entitlements, rights to be forgotten, data depreciation, reputation damage and data lies — are an under-priced risk factor when assessing the value of potential tech unicorns. I also learned that most sharing economy companies (and the gig economy amateur contractors they depend on) are massively under accounting and under capitalizing for risk-related operating costs such as insurance coverage, legal risk, capital depreciation risk, misselling/shoddy quality claim risk, cyclical oversupply risk, fraud risk, maintenance costs and… the most significant one of all… customer relation/troubleshooting
(editor’s note: Jesus, Izzy – lighten up!)
Tadas Viskanta (Abnormal Returns): when you run out of ‘smart beta’ factors you throw them all together ‘Mad Libs’ style to come up with a ‘proprietary multi-factor model’ for the ETF crowd.
John LeFevre (GS Elevator):
1. Trigger warnings and safe spaces can’t protect people from Donald Trump. They created Donald Trump.
2. Drunk libertarians at a dinner party are far more annoying than vegan Crossfitters.
3. If you’re afraid of public speaking, just pretend everyone in the audience is staring at their phones.
4. A market selloff is worse than a divorce. You lose half your money, but your wife is still around.
5. Watching how someone behaves at an open bar tells you everything you need to know about them.
Thanks guys! Love you all!
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