This article first appeared on the SMH website: It is Michael Pascoe’s take on the Roberts “sell everything” fiasco. 


The unending game of bulls v bears

Remember the biggest market scare headline from January 2016: The Royal Bank of Scotland’s “sell everything!” alarm? And the $10,000 bet Steven Koukoulas tried to make against the RBS analyst? Well now the tables have turned and “The Kouk” is the bear.

Funny thing about the RBS analyst who made the “edge of a cataclysm” call – he seems to have disappeared. After advising RBS clients they should sell everything except high-quality government bonds, Andrew Roberts hasn’t turned up on a Google search since. I’ve gone through several pages of searches but there’s been nothing fresh from Mr Roberts since that headline-grabbing advice.

Arguably the world’s biggest bear at this time last year seems to have disappeared, but the bull who most publicly called him out has himself turned into a bear. Michael Pascoe comments.
If he was out to get publicity, he was certainly successful, featuring in stories around the world. Embarrassingly, much of the coverage was uncritical or even barely sceptical. Hey, fear sells.

But not everyone was unquestioning. Stephen Koukoulas of Market Economics, alias The Kouk, went a step further than expressing doubt by immediately calling Roberts out, prepared to bet 10 grand that at least six of 11 markets Roberts indicated as losers would in fact rise.

Koukoulas never heard from Roberts, but he kept score anyway. As it has turned out, all 11 of the nominated markets finished in the black, averaging a stunning gain of 29.6 per cent with the US dollar iron ore price the best performer, up 85.9 per cent. Roberts wasn’t just wrong, he was stunningly wrong. In the pantheon of failed Doomsday forecasts, he’s at the top table with Marc Faber and whoever it is who has been advertising “The Crash of Next Year” for the past several years.

What’s more, it turns out Roberts had prior form. As Bob Veres reported, Roberts gave doom a ramp in 2010, broadcasting: “We cannot stress enough how strongly we believe that a cliff edge may be around the corner, for the global banking system (particularly in Europe) and for the global economy. Think the unthinkable.”

And then in 2012: “People talk about recovery, but to me, we are in much worse shape than the Great Depression.”
Of course, if you keep forecasting a big fall, one day you’ll eventually be right. Our own professor Steve Keen, unbowed by his failed 2008 prediction that Australian house prices would crash by 40 per cent, forecast last March that Australia would have a recession by 2017.
Whoops, it seems to be running late.

But in a twist to the bulls versus bears game, now it’s the Kouk who has turned cautious, predicting Australian and global stocks will fall, commodity prices will drop, including a halving of the coal price, and he’s tipping Australian unemployment to finish this year at 6 per cent despite the Reserve Bank cutting interest rates two more times.

Hmmm, I wonder if Roberts, wherever he might be, is quietly going long everything this year?