Via Peter Tchir of TF Market Advisors,
Rather than making some predictions, here is a list of words and phrases that were popular in 2011 that just annoy me. It would be nice if they become less popular in 2012, but I predict they will remain in use.
No self-respecting videogame would have a “bazooka” as the ultimate weapon. Bazookas just aren’t that powerful. Maybe Europe needs to search for a “nuclear” option, that at least sounds big enough to scare people. Or, just maybe, Europe needs a credible plan for debt sustainability rather than a “weapon”.
No policy ever fails anymore, it just had “unintended consequences”. Unintended consequences sounds better than sloppy planning, but when a consequence is forseeable and likely, it is not unintended. Unwanted, yes, but unintended, no. If I punch someone in the face, and they punch me back and break my nose, that is not an unintended consequence. It is not the result I was looking for, but it is a completely logical outcome. We will never get to the point where decision makers admit that they made bad decisions or didn’t think things through carefully, but unintended consequences is not an excuse.
Not everything that is bad is a black swan. Black swans are things that no one thought could exist (based on some amount of analysis) that turn out to exist. The Fukushima plant was a disaster, but not a black swan. They just didn’t plan well enough for a likely possibility. It seems like small mistakes are covered up by being “unintended consequences” and big mistakes are covered up by saying they were “black swans”. Accountability would be much better.
Transitory sounds much better than temporary. Maybe it is used because everyone knows what temporary means, but transitory is a little harder to nail down. The Fed in particular has embraced “transitory”. Anything that occurs that they don’t like is deemed as “transitory”. This is even better than talking about unintended consequences because it implies you have actually thought of everything and that the bad stuff will go away. Maybe that is why Ben really, really, really likes it. CPI was 3.4% over the last 12 months, that doesn’t exactly seem “transitory” to me.
Bipartisan is a myth. In American politics it has come to mean that the other side decides to agree to your view, or that both sides get what they want. In no case does it imply a willingness on your part to change your stance materially.
Why is someone who invests in gold, considered a “gold bug”. Why are shorts constantly reminded that being short a stock can cause you have unlimited losses? I know far more people who have lost 100% of their money being long, and no one who has lost an infinite amount of money being short. Maybe it is just a cute term, or maybe it is a way to disparage people who invest in anything other than stocks and bonds.
CDS and ISDA and Credit Events
Okay, I’m not bored with this one and hope it gets used more in the future, but am shocked how many people who have never read the ISDA Credit Derivative Definitions, have never traded a CDS, have strong opinions on the subject.
How January goes, the year goes
We are about to hit that time of the year, where everyone points out how the first day in January is important, or the first week, or the first month. The S&P 500 went up over 1% on January first last year to hit 1272. It ended the month at 1282. On the bright side, it looks like that “buy” signal worked as the S&P is going to finish the year positively, but anyone who bought at the end of January will have lost money. All these rules of thumb and “ideas” based on historical annoy me, but I am sure we will hear about how important the first trading day and week are again. It is kind of ironic that in 2010 almost the entire gain in the S&P was captured on the first day of the month. In 2011, the entire gain was captured in the first trading day of the year.
We are going to get even more summits this year, but we have done it to ourselves. Somehow we have decided that phones are insufficient and the only way to properly rally around a Grand Plan announcement is at a fancy summit.
Somehow we changed what a “realist” is. Things that at one time would have been considered giddy with optimism are now “the norm”. Looking at facts and analyzing them and coming up with negative conclusions leads to being a labeled a cynic or even a “doomer”, yet those conclusions have turned out to be correct more often than not.
Dude, when was the last time you made it to the gym?
That is just depressing and mean, but may be more of a personal issue, than a market one.
Have a Happy New Year and a great 2012 and thanks for all your support and comments and helpful insights.