These 10 clunkers are my worst calls from a decade’s worth of investment advice

These 10 clunkers are my worst calls from a decade’s worth of investment advice

For those of us in the opinion writers’ trade, ‘tis the season
to pound our chests for our prescience and don sackcloth and ashes for our
errors over the past year.

But in this, my 10th year as a MarketWatch columnist, I thought a broader accounting was in order, so I’m reviewing my entire record over the past decade. Scanning the more than 500 columns I’ve written during that time, I found that every time I wanted to pat myself on the back, I found something I’d written that made me cringe. (I’m focusing on my own opinion pieces, not columns that featured the views of others.)

All in all, I think there were many more winners than losers, but that’s for you to judge.

Today I’m putting my worst foot forward by calling out my
clunkers, Next time, the cream of the crop.

10. A few times I thought the Federal Reserve would raise interest rates, believing that the economy would be stronger than it actually was and that the Fed would behave like a normal central bank. Two examples: In 2014, I warned that Chairwoman Janet Yellen needed to worry more about inflation and even after the late 2018 stock market rout and Fed rate retreat, I still thought Fed Chair Jerome Powell wasn’t done with rate increases in 2019. Nope.

9. I also warned a couple of times that rising rates would reduce the value of investors’ bond holdings. In 2015 I said the bond market was no longer a haven and declared the following year would be investors’ last chance to dump bonds. Instead, as we all know, rates on shorter-term Treasuries have fallen back to just above zero in the U.S. (and have gone negative for some European bonds) in the wake of the COVID-19 pandemic.

8. I had a particular aversion to high-yield bonds, where I thought investors weren’t getting compensated for the additional risk they were taking on. They weren’t, but it didn’t matter because their desperate search for yield has bid up high-yield bonds’ prices to this day.

7. I also called bear markets in stocks that never happened in 2016 and 2019. Both years saw selloffs but not enough to constitute real bears, and the S&P 500 index

went on to new highs.

6. I’m generally not a fan of cyclical stocks and my bias got the better of me when I wrote in 2013 that the party was over for these economically sensitive equities. Since then, the Consumer Discretionary Sector SPDR ETF

has gained 149%, beating the S&P by 40 percentage points.

5. Early in his administration, President Donald Trump engaged in saber rattling over North Korea’s nuclear weapons program. I wrote that a potential war with North Korea was one of the biggest threats facing  markets and the world. My big mistake, of course, was taking the president at his word. A face-to-face meeting with leader Kim Jong Un and subsequent love letters was enough for our president to lose interest. North Korea’s nuclear program is now bigger and more lethal than ever.  As for me, I’d much rather be wrong than dead.

4. I also underestimated, then overestimated the impact coronavirus would have on stocks. In February I called the coronavirus selloff a “full-blown stock market panic” and a “buying opportunity.” That was true and the S&P, Dow Jones Industrial Average

and Nasdaq Composite index

have gone on to all-time highs. But the ride was a lot rockier than the mild selloff I expected and COVID-19’s impacts far greater. Then, in April I wrote it could take years for stocks to recover from their one-third selloff. Of course, it happened in months.

3. And then there’s Tesla
I never weighed in on the stock price (I don’t have a clue how to value this company), but I did say its genius/crank founder Elon Musk was a classic example of a celebrity CEO who was “not cut out to run a public company.” Musk and other celebrity CEOs are alive and well, and since that column ran Tesla’s shares have soared 1,200%. You win, Elon.

2. Similarly, back in June 2017 I wrote that it was “all over for the FAANG stocks”—Facebook

and Google parent Alphabet

But the NYSE FANG+ index has tripled since its launch in September 2017, shortly after that column ran, while the S&P gained 44%.

1. My worst column of the decade appeared in February 2013, when I said Apple would  never see $700 again because, I wrote, growth was slowing and the company was losing its innovative edge. Since then, Apple’s stock has skyrocketed nearly 700%–four to five times the gain of the S&P. It closed Friday above $126 a share after two big stock splits in the intervening years. It may have been worth more than $2,000 a share before the most recent split and who knows? It may well see $700 on an absolute basis in the years to come.

My skepticism about highflying momentum stocks is probably my biggest weakness as an investor and it showed over the past decade. Fortunately, my strengths paid off big for readers, and we’ll go into them next time.

Howard R. Gold is a MarketWatch columnist. Follow him on Twitter @howardrgold1. He doesn’t own any of the securities mentioned in this column.

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