Dragging our bruised and battered psyches and souls across the finish line of 2016, and not a moment too soon.
I should have known this year would be a trainwreck when it started with the death of David Bowie and a gruesome global market correction. It sort of got better from there, and then much, much worse and then…maybe a little better. And then Carrie Fisher needlessly, pointlessly died. And then, just to put a bleeding cherry on top, her mother dropped dead the next day. And this is on top of losing Ali, Prince, Cohen, Phife and too many countless others to mention.
And the elections. My god. Everyone hates each other now but the stock market seems okay with that. Fine. You win, 2016, I give up. Although it was cool to see the Cubs win it all and to get a new album from Radiohead. So, not all bad.
But now it’s over. Have we learned anything?
You’ve already heard enough from me this year, so now, with a little help from my friends…
In 2016 I Learned That…
Jonathan Krinsky (MKM Partners): in financial markets, it’s not the news that matters, nor is it the reaction to the news. As we learned during Brexit, and again during the U.S. presidential elections, it’s the reaction to the reaction that matters.
Howard Lindzon (Alt-Right Hero): at 51, my toes are hideous and should be covered at all times.
Nelson Braff (Hunt & Fish Club NYC): it’s easier to make Donald Trump president than the NY Jets relevant.
Stephen Weiss (Short Hills Capital): pollsters are perhaps the most significant beneficiaries of full employment conditions because otherwise they would surely be looking for work.
Tom Brakke (Research Puzzle): anything can happen.
George Pearkes (Bespoke Investment Group): Murphy and his Law are always right around the corner.
Jon Boorman (Broadsword Capital): political events are harder to predict than markets.
Michael Kitces (Nerd’s Eye View): “The Markets” aren’t any better at predicting political outcomes than pollsters. Nor are they any good at predicting the economic consequences of those political outcomes!
Andy Swan (LikeFolio): no matter how smart the individuals inside of a group are, if the entire group agrees on a prediction of any kind, that prediction will be completely wrong in the most hilarious, HIGH-ENERGY way possible.
Ben Eisen (Wall Street Journal): nothing will ever stop people from predicting that rates will rise next year.
Linette Lopez (Business Insider): humans will behave selfishly if we are repeatedly told we are selfish, but mostly we are cooperators at heart. We wouldn’t have society otherwise. The market knows that about us, and so it seems to take quite a lot of selfishness to change its historical trajectory. It just depends on how much we have floating around.
Julie VerHage (Bloomberg): one should never stop learning and growing.
Brian Lund (The Lund Loop): you have to be your own muse.
Ari Wald (Oppenheimer): bulls make money, Bears make money, but investors without a flexible process get slaughtered
Roddy Boyd (Southern Investigative Reporting Foundation): the long moral arc of the universe bent ever so-gently towards justice with the Department of Justice’s drumbeat of arrests at Insys Therapeutics and–likely–Valeant Pharmaceuticals. I’ve been reporting on fraud for a long time so it was nice to see bad guys at both companies get what they so richly deserved.
Peter Boockvar (The Lindsey Group): if the Cubs can finally win the world series after 100 years, then anything is possible and one day I can finally win my fantasy baseball league after 26 years of futility.
Steve Spencer (SMB Capital): Ball Don’t Lie!
Jake (EconomPic): a strong up trend is more powerful than weak fundamentals, high valuations, a deteriorating geopolitical environment, and a fractured US political system. And that Lebron may be the GOAT.
Pierce Crosby (StockTwits): life is like a lasagna, the people in your life are the ingredients.
Ivanhoff (MarketWisdom.com): the more you give, the more you get later in life
Max Keiser (The Keiser Report): Bitcoin haters are ill informed purveyors of fake news and probably bitter Hillary clinchers.
Allison Schrager (Quartz): I have more faith in democracy than my own judgement.
Morgan Housel (The Collaborative Fund): everyone lives inside their own little bubble and only once in a while do we realize it.
David Schawel (New River Investments): even if you know the outcome of an event, you don’t necessarily know how the market will respond.
Chartin’ Greg Harmon (Dragonfly Capital): politics twitter is far worse than finance twitter.
Kirsten Fleming (New York Post): you can meet your best friend on Twitter, lose a good friend over a Facebook status and have the wisdom to laugh at the absurdity of it all.
David Blair (Crosshairs Trader): the so-called January Effect is not effectively predictive.
Bob Seawright (Above the Market): nobody can come close to predicting the future (it’s a lesson I need to keep re-learning every year…month…week…day…).
JC Parets (President-Elect, Cuba): for market participants, the traditional financial media is more of a distraction than even I ever thought. The noise this year hit a whole new level of irresponsibility driven by a cancerous conflict of interest by those who get paid to just sell ads. To me, this is further evidence suggesting to watch less tv, read fewer articles and instead spend that time reading more books.
Brian Portnoy (Virtus Investment Partners): there is nothing harder for most investors than thinking beyond the short-term, even when they know that is exactly the problem.”
Paul Hickey (Bespoke Investment Group): I apparently have issues with the pronunciation of the words Tesla (“Tezla”) and huge (“yuge”).
Tony Isola (A Teachable Moment): the sky is the limit if you dream big enough.
Cullen Roche (Pragmatic Capitalism): most people want to be told the things they think they already know. Good asset management is mostly about preparing a portfolio for the things we don’t already know. So while most investors are attracted to the strategy that takes advantage of seemingly certain themes and narratives the most consistently beneficial strategies are likely to be those that prepare people for what they don’t already know.
Ian Rosen (StockTwits): Zuck is the new Hearst, everyone is listening to your phone, and emotional decisions still pack a big punch.
Larry Swedroe (Buckingham Strategic Wealth): When it comes to investing individuals think three years is a long time, five years a very long time and ten years is an eternity. They fail to recognize that even ten years can be nothing more than noise.
Larry McDonald (Bear Traps Report): the mainstream media still doesn’t get the tsunami that is global populism.
Todd Sullivan (ValuePlays): if most adults interacted in the world the way children do, it would be a better place. I also learned that the more complicated and obtuse the analysis, the more likely the best course of action is to completely ignore it.
Joe Fahmy (Zor Capital): Chief Financial Officer is the worst Native American name ever.
Nick (Barbarian Capital): Impossible is nothing, as the Adidas ads warned us.
Cathleen Ritt (Rockettes, 2004-2007): I learned that a lot of people really want to work in factories
Blair duQuesnay (Thirty North Investments): Anything is possible. You might think I learned this during the 2008-2009 financial crisis, but the election of a reality TV star as President made me a believer. My confidence intervals are forever widened.
Andrew Thrasher (AThrasher): all it takes to get people to like musicals and American history is a great down beat and rap lyrics. 2016 also reinforced the importance of ignoring the crowd. While it was believed to practically be written in stone that a Trump win would tank the market, the crowd once again got it wrong. Disregard political opinions and follow price.
Justin Frankel (RiverPark Funds): no other investment yields higher returns the time you invest being with your friends and family.
Aaron Task (Fortune): nobody knows nuttin about nuttin.
Michelle Celarier (New York Magazine): the Russians are still the Evil Empire, although a tiny one.
Jeff Hirsch (Stock Trader’s Almanac): the best course of action is to stay with your evidence-based strategy in the face of impending one-off events.
Ryan Detrick (LPL Financial): a 10% S&P 500 return might be about average, but getting to average can be anything but average. I also learned not to doubt the Chinese zodiac, as equities gained during the year of the Monkey in 2016, just as they have every time since WWII.
Michael Batnick (The Irrelevant Investor): polls should be taken with a boulder of salt.
Mark Dow (the beach): there is no way to overestimate our cognitive shortcomings.
Jeff Carter (Points and Figures): facts don’t matter. People tailor facts to their own reality.
Quantian (the Deep Web): if you want a contrarian idea, screaming Twitter lunatics with a few hundred followers and viewpoints that sound deranged are more likely to make you money than a perfectly credentialed hedge fund manager with slickly produced slide decks and billions in AUM.
Derek Hernquist (Adhesion Wealth Advisor Solutions): Actual votes, and actual dollars, are just a bit more meaningful than any collection of sentiment polls. And if the Cavs and Cubs can win, maybe the Bills can too.
Jon Steinberg (Cheddar): as John Malone has been known to say, conventional wisdom is typically right and seldom profitable. I will continue to make bets no one else is making and hope I skate to where the puck ends up.
Brian Shannon (AlphaTrends): most “experts” and analysts continue to make terrible calls. Risk management is always job #1 and Only Price Pays!
Barry Ritholtz (noted chinese food connoisseur): truth remains way, way stranger than fiction.
Eric Jackson (TBA): a journey of 1000 miles begins with a single step.
Julian Hebron (TheBasisPoint): the Sword of Damocles does indeed hang over you if you’re a senior executive. I also learned that most startup lenders don’t properly respect full market cycles.
Brooke Southall (RIABiz): for all of the accelerating pace of change in the RIA business, complexity continues to be offset by the immutably singular concept of putting the client first.
Todd Harrison (Ruby Peck Foundation): the Oakland Raiders have returned to greatness.
Izabella Kaminska (FT Alphaville): I am addicted to my mobile phone and that this is impeding my attention, productivity, ability to commit and general social skills. I have come to the conclusion that if the same applies to most people then this is leading to a profound negative impact on the economy without any of us really appreciating the root cause of the problem. I also learned that instant gratification should not be mistaken for economic progress if it comes at the cost of greater inequality, unsustainable labour systems, cross-subsidized systems and the destruction of the life journey itself.
Meb Faber (Cambria): the things people find beautiful, useful, or magical are so wonderfully weird.
James Osborne (Bason Asset Management): I’m at my best, and happiest, when I’m working on being better. That the path, not the destination, is the best part.
Invictus (The Big Picture): clients don’t care as much about letters of the Greek alphabet as you think they do.
Tobias Carlisle (Greenbackd): In the quiet words of noted value investor Billy Bragg, “No-one knows nothin’ anymore:” Ignore The Worst Start To The Year Ever(TM), Brexit, the election and stick to the plan: buying deeply undervalued stocks.
Stephen “Sarge” Guilfoyle (Sarge’s Market Recon): Army can beat Navy.
Kid Dynamite (Kid Dynamite’s World): the movie Idiocracy was a prophecy, not a comedy.
Helaine Olen (Slate): things can always get worse. Also no matter how bad things are, my mood will improve dramatically if I go out and hear live music.
Derek Thompson (The Atlantic): when an event occurs that confounds all expectations about the future, it can make people even MORE certain that all of their priors were correct.
Bill Winterberg (FPPad): BlackRock, the world’s largest money manager, hired a Buzzfeed executive to lead marketing, so here’s 24 hedge fund managers that look like Channing Tatum who will restore your faith in the markets
Scott Redler (T3 Live): price action continues to Trump opinions.
Lady FOHF (post-Brexit England): getting things right by accident is sometimes the best outcome. Thinking long term protects you from emotional short-term decisions. People can be so much worse and so much better than you can ever imagine.
Jonathan Wald (CNN): we should always stay gracious, the best revenge is your paper.
Ivan the K (talk radio phenom): real experts were in short supply and real facts were in short demand.
Jay Yarow (CNBC.com): nobody will ever believe anything ever again. Or, at least they won’t believe anything for a while.
Zach Shrier (Shrier Wealth Management): we shouldn’t trust our own predictions – not because they’re never right – but because they’re irrelevant. Good investments can weather surprises.
Eric Balchunas (Bloomberg): expense ratio is the new past performance chart and that selling a book takes just as much hustle as writing a book.”
Ben Carlson (A Wealth Of Common Sense): you should always give yourself at least 10-12 hours when traveling more than 2-3 miles in New York City traffic. This is especially true when trying to catch a flight and your cab has to drive by Trump Tower. Also, people have a really hard time understanding and accepting the differences between other individuals, groups, geographies, cultures, etc. You never know what someone else is going through in life. In the words of Harold Ramis, “Life is ridiculous, so why not be a good person?”
Aaron Klein (Riskalyze): conventional wisdom is dead. When elites claim that markets will most definitely crash if voters Brexit or Wall-it, the opposite can often occur.
The Wall Street Ranter: it is extremely hard to underestimate the intelligence of US voters.
Tadas Viskanta (Abnormal Returns): the words of Adlai E Stevenson II were more prophetic than we had thought: “In America, anybody can be president. That’s one of the risks you take.”
Downtown Josh Brown (Chief Investment Strategist, Goldman Sachs): есть, вероятно, видеокассета с его стороны, с карликами.
James Altucher (Formula Capital): when I accepted my life was meaningless, it became filled with meaning.
Nick Murray (Simple Wealth, Inevitable Wealth): 2008-09 really was a “Death of Equities” moment, in that it had engendered an existential terror of equities on a scale not seen since near the end of that 1968-80 liquidation. I infer from this that the secular bull market that started in March 2009 does not just have further to go (in both time and percentage gains) than I thought it did. In awe and wonder: It has further to go than anyone thinks it does.
Thanks guys! Love you all!
What did we miss? What did you learn in 2016? Who had the best lesson of all in this post? Tweet from the link below!