I am not sure if Andrew Roberts, the RBS markets guru who famously kicked off 2016 with a recommendation to clients to “sell everything” still has a job, but anyone who followed his prognostication would have lost a lot of money. An aweful lot.
At the time Roberts’ started grabbing global attention with his extraordinary, ill founded, irrational and illogical forecast, I offered him some ‘skin in the game’ in the form of a A$10,000 bet that he would be wrong – that many of the markets he identified as a “sell” were in fact a “buy”. The link to that offer is here https://thekouk.com/blog/sell-everything-my-challenge-to-andrew-roberts-of-rbs.html
As noted previously, it was a very generous offer on my part – Roberts only had to have the price of 6 of the 11 categories offered to fall to win – ie, not ‘everything’.
Suffice to say, Roberts did not return my email, which is a pity. That $10,000 would have been handy beer and HSP money for 2017.
Anyway, to the facts.
2016 was a great year for stocks, house prices, commodities and even the Australian dollar.
As the table below shows, four of the 11 items offered in the bet rose by 48 per cent or more – iron ore, oil, Brazil stocks and copper. Four other categories rose by between 11 and 17 per cent – the US S&P500, Sydney house prices, and Chinese and Japanese stocks. The other three items rose by a few per cent
The simple average gain of the 11 items was a stonking 29 per cent. Not sure whether there are too many fund managers who got anywhere near that return in 2016.
Level at time Latest Difference
of bet %
US stocks S&P500 1925 2239 16.3
Brazil stocks Ibovespa 39500 60227 52.4
China stocks Shenzhen 1850 2060 11.3
Japan stocks Nikkei 17200 19114 11.1
US house prices Case-Shiller 182.83 191.79 4.9
UK 20 city house prices Hometrack 228800 243200 6.3
Sydney house prices Corelogic 915 1056 15.4
Iron ore US$ tonne 40.50 75.30 85.9
Oil WTI US$ barrel 31.50 53.72 70.5
Copper US$ tonne 4325 6422 48.5
AUD/USD 0.7000 0.7205 2.9
Simple average 29.6%
So for Roberts, it must have been a tough year. I generally like people who make bold forecasts but only when they are well founded and argued and importantly, when the analyst is willing to back their judgment. Interestingly, not many do this.
It will also be interesting to see whether any of the media, who obligingly gave him blanket coverage around the world with his outlook of gloom, follow up on that enthusiastic coverage with a few home truths. I suspect we wont see anything on Page 1 looking back at what Roberts said this time last year.
And to be fair – in economics and markets, we all make mistakes. My call for RBA rate hikes about a year ago was dreadfully wrong. The trick is to own those forecasts, defend them until the facts either go with you or against you and to be fleet of foot to take advantage of market trends.