9 Comments
Oct 5, 2023Liked by Joachim Klement

For a sell side analyst a Hold is really a sell. But they don't want to ruin the IB team's chance of an ECM deal in the future. Nor do they want to be cut off from the company.

Buy side analysts and PMs, don't have this excuse.

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Agreed. When I was on the buy side, I always treated Holds as sells.

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Oct 5, 2023Liked by Joachim Klement

'five strategies used by experts to salvage their reputation'

#6, a Dutch speciality: when Ajax or the national football team lose, it's because the opponent refused 'to play football'. I.e. the opponent refused to lose and/or get slaughtered. In the Dutch context 'playing football' means having a focus on the offense while handing your opponent ample room to counterattack. Opponents who do not follow that (Dutch) rule are considered bad sports. It follows that Dutch teams win every match, even when they lose. For they are morally superior.

It would be pretty easy, especially in the current atmosphere of high morals and righteousness in the west, to come up with a 'morals-based forecast', which will be correct whatever the outcome eventually is.

It could be called 'Critical Forecasting' or something like that. 'Post-Colonial Forecasting'?

And don't forget the TikTok videos.

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Love it. And I would say ESG provides a wonderful moral high ground from which to make forecasts. If the forecasts go wrong, it was because other companies had better governance or the company in question was undermined by a lack of diversity off ideas and empowerment of their employees, etc.

I think I have to start using that excuse :-)

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What surprises me is that people who are totally wrong and don't really admit it somehow manage to continue on with their work. It points to a lack of failure culture in the financial business, which is not a good sign.

For every Jim Cramer who gets laughed out of Twitter every time he posts, there are plenty of other guys who got it wrong so often they should really give up their day jobs, but they seldom do.

Starting with the permabears who are as reliable as a stopped clock, continuing on with the Cassandras about which you so eloquently wrote, I remember this bloke who in April 2020 wrote on Seekingalpha.com how C19 would crash the global economy, no doubt about it. Two years later he was sure that the winter of '22 would see a severe recession or depression in Europe. No hedging, no remorse, nothing. How do these people stay in business? Don't clients do any research, or don't they care?

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Oct 10, 2023Liked by Joachim Klement

Consider how long and how public Cramer made predictions before he lost his credibility with the wider audience.

Shows how little attention past forecasts get at all.

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And an inverse Cramer ETF was helpful in his downfall as well. Nothing like a public track record.

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This is why I wrote my Against Cassandras series. It is incredible how long you can stay in business by just being consistently bullish or consistently bearish all the time. Shows you that it is not about performance, but about ideology.

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Oct 10, 2023Liked by Joachim Klement

Owning up to a failed forecast publicly only works in your favor if the perceived loss of credibility and reliability not overpowers the

effect on perceived self-orient. Considering human loss aversion it is natural to try to burry the mistake, especially if you are not in full control of all communication.

Trust = (Credibility + Reliability + Intimacy) / Self-orientation

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