"Expert" Opinions - From the Desk of Brock Rouch

"Expert" Opinions - From the Desk of Brock Rouch

March 07, 2024

A big part of my role is to stay up to date on current events that can affect the market and our portfolios. During my daily readings, I often stumble upon articles that make big predictions about future market movements/returns. These are often made by so-called “experts”….Obviously, the term “expert” is largely subjective and possibly for as many times “they” are wrong, “they” are also right. Here’s an article from one “expert” named Leon Cooperman from May 30th 2023 Billionaire investor Leon Cooperman says the US is going through a 'textbook' financial crisis and the S&P 500 won't hit a new high for a long time (yahoo.com). I read the article on that day and made a point to save the link so I could check on his prediction later. This gentleman made quite a bold prediction and couldn’t have been more wrong. In the time since the article was published, the market is positive around 21% which is a far cry from his opinion of a 20% drop. 

I highlight this because it is one of the largest traps for the average investor. Information overload, news articles, or TV segments that create financial fear can cause overreactions and very costly portfolio management mistakes. I’d venture to guess the accountability for his incorrect predictions are minimal and he probably made such a bold prediction precisely because it got him airwaves. It’s important to realize that making investment decisions based on opinions like this, especially when it involves market timing is a fool’s errand.  We approach investing by shrugging our shoulders at such opinions and focusing on the fundamentals of What investments we choose to own for our clients, Why we like the investments, and When is a good time to sell or buy. 

Our portfolios have experienced a solid start to the year, mostly on the back of strong corporate earnings, something we felt was on the horizon, coupled with a further realization that Artificial Intelligence advancements likely will boost productivity and future profits.  We still hold our view as “cautiously optimistic” which I believe is in line with what I hear from the companies themselves when I listen in or read their earnings releases and projections.  Those releases drip with good results and optimism. 

Here’s an example from Amazon (AMZN), which is one of our most widely held positions in the portfolios we manage on behalf of our clients…

Reading that certainly gives me the feeling that Amazon is in a solid position moving forward. There’s a lot to be optimistic about in this country and the contrarian in me feels the best days might actually be ahead regardless of the narrative.

Until next time.