Thanks to the constant grind of a 24-hour news cycle and a fast-moving market, it’s easy for the “experts” to make market predictions and never look back.
It’s also convenient.
After all, the best way to avoid accountability for old calls is to forget they exist.
It has always been my habit to periodically revisit my calls, with as much honesty as I can. It’s primarily because I find it instructive as an investor to learn from my mistakes, but also because as a writer I believe I owe it to the readers who suffer through my commentary.
The stock pickers who act as if they are smarter than the rest of the market are fooling nobody. For every absurdly lucky penny stock trader who gets lionized by Fortune, there are countless others who lose big.
And for every Carl Icahn, there are plenty of Bill Ackmans playing counterparty.
There isn’t even much of a debate anymore about passive vs. active management. In 2013, there was roughly $41 put into passive index funds for every $1 put under active management… enough said.
So let’s not play games. Stock picking is incredibly hard to do, and if my most spectacular train wrecks help drive that home … so be it.
Here are my stupidest investment ideas of 2013:
There’s literally not a single stock in the S&P 500 (^GSPC) that has done better than this high flier, which is up about 300% year to date in 2013.
But about a year ago, I opined that there was “too much room for error” and that the late 2012 rally “didn’t have much staying power.”Getty Images Kevin Spacey stars in Netflix's "House Of Cards," an original series that has proven popular with viewers.
I’ve long been a Netflix Inc. (NFLX) subscriber who enjoys the product, but as an investor I still couldn’t shake the bungled Qwikster debacle of 2011. I doubted the costly bet on original programming and feared the competition would weigh on Netflix big time.
Now, I’m ready to admit that Netflix is much more than a company in the right place at the right time. Its programming moves and growth plans are showing real promise. So much so that I’m convinced this year’s returns are only the beginning.
I could simply keep doubling down like a stubborn bear, but as Baby’s dad says in “Dirty Dancing”: When I’m wrong I say I’m wrong.
Besides, this switch to a bullish call on Netflix will make next year’s column even more hilarious if I’m wrong again…
Unlike Netflix, I’m not ready to completely capitulate on my dumb Yahoo Inc. (YHOO) call.
Sure, when I panned the stock at the end of 2012, I grossly underestimated the value of the Alibaba stake. This Asian Internet business continued to grow rapidly in 2013 — and a red-hot tech IPO market make the asset even more valuable.Getty Images Yahoo CEO Marissa Mayer speaks during the 2013 Dreamforce conference.
But beyond Alibaba — and — I should also add — Yahoo’s stake in Yahoo Japan, the company sure seems to have a lot of problems. The contribution from foreign assets is driving the train, not the cult of Marissa Mayer, as some would have investors believe. Two dozen knee-jerk acquisitions can’t paper over a declining online advertising business. And even if you want to overlook the secular declines in Internet display ads, the move to mobile and away from portal pages like Yahoo and AOL (AOL) is yet another megatrend working against Yahoo.
I don’t expect the run to last much longer now that the anticipation of an Alibaba IPO is baked in. sure, shareholders can hang on for a big special dividend… but what’s the opportunity cost of that if the market keeps flying higher in 2014?
Who cares what I think though, since my stupid calls on Yahoo and Netflix together mean I managed to badmouth two of the top 10 performers in the entire S&P 500?
But it wasn’t all bad
There are plenty of other lesser evils from my 2013 writings — a panicky February column about fears that stocks would slide (they ran another 20% or so), for instance.
There are plenty of so-so ideas that worked in part, but not in full. These include a May column on three dividend stocks where one tracked the market, one soared 33%, and the other is in the red since then even including dividends.
But every once in a while, I did manage to open my mouth without sticking my foot directly into it.. These calls included
Like a July 8 column, “3 reasons solar stocks will remain hot.” The Guggenheim Solar ET (TAN) has run 40% since then.
Or my Aug. 8 column, “The Case to go long Europe.” Major Europe ETFs including the Vanguard FTSE Europe ETF (VGK) have outperformed even the red hot S&P since then.
So, what’s next?
If you’re curious about my big calls for 2014, in my personal portfolio I’m biased towards China and materials as the biggest areas of opportunity.
If I’m right, at this time next year I’ll be touting my October column, “The not-so-crazy case for commodities stocks” and my November column, “It’s time to buy China.”
If I’m wrong… well, the least I can do is admit it.
Thanks to all the readers who kept me honest in 2013 with all your comments on MarketWatch and your tweets on Twitter.
I’m looking forward to more spirited debates about stocks and the markets in the new year.
More from MarketWatch:
Alibaba shields Yahoo investors from mail fail
Expect surprises from Apple, Italy and bitcoin in 2014
What 2013 meant for your taxes
Jeff Reeves is the editor of InvestorPlace.com. Follow him on Twitter @JeffReevesIP.
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