Reviewing Doug Kass’s 15 Surprises for 2012

December 11, 2012  |  Finance

We started tracking Doug Kass of the TheStreet.com this year (click here for his PunditTracker profile page), starting with his 15 surprises for 2012. Here is how Kass describes his surprises:

<< It is important to note that my surprises are not intended to be predictions but rather events that have a reasonable chance of occurring despite being at odds with the consensus….. In sports, betting my surprises would be called an “overlay,” a term commonly used when the odds on a proposition are in favor of the bettor rather than the house. The real purpose of this endeavor is a practical one — that is, to consider positioning a portion of my portfolio in accordance with outlier events, with the potential for large payoffs on small wagers/investments. >> [thestreet.com -- click here for his list of surprises as well]

As Kass notes, the standard “hit rate”/”batting average” metric is not suitable to evaluate his predictions. Instead, PunditTracker’s scoring system is ideal, given that our “$1 Yield” metric explicitly incorporates the boldness of predictions by measuring the average payout had you bet $1 on each of them, based on consensus odds at the time. A yield of exactly $1.00, for instance, means the pundit’s predictions were no better or worse than the consensus view at the time.

While there are still several weeks to go in the year, we figured it was an appropriate time to quickly review how Kass’s surprises are shaping up:

Sears Holdings declares bankruptcy (High Boldness)

  • FALSE: 0/1; Running $1 Yield = $0.00

S&P 500 rises to at least 1527 (High Boldness)

  • While the S&P is up 10% this year, it has failed to surpass 1475 (let alone 1527)
  • FALSE: 0/2; Running $1 Yield = $0.00

Defcon Three Alert (High Boldness)

  • FALSE: 0/3; Running $1 Yield = $0.00

One-third of current ETFs are forced to close (High Boldness)

  • While the spirit of Kass’s prediction has come true (Morningstar has dubbed 2012 as the “Year of the ETF Closure“), with about 100 ETFs expected to close, Kass’s one-third figure is far too high.
  • FALSE:  0/4; Running $1 Yield = $0.00

Israel attacks Iran (High Boldness)

  • FALSE: 0/5; Running $1 Yield = $0.00

Bill Clinton and George Bush form a bipartisan coalition (Medium-High Boldness)

  • FALSE: 0/6; Running $1 Yield = $0.00

Mitt Romney wins the election (Medium-High Boldness)

  • FALSE: 0/7; Running $1 Yield = $0.00

Real GDP accelerates to over 3% in the second half of 2012 (Medium Boldness)

  • Revised Q3 GDP growth was 2.7%, but consensus is for Q4 to be lower
  • FALSE: 0/8; Running $1 Yield = $0.00

Buy European Stocks: MSCI Germany & MSCI France (Medium Boldness)

  • MSCI Germany is currently up 23% YTD, while the MSCI France is up 19%. This compares to 13% for the S&P 500.
  • TRUE: 1/9; Running $1 Yield = $0.22

Buy high-quality muni bonds (Medium Boldness)

  • TRUE: 2/10; Running $1 Yield = $0.40
Financial stocks will outperform (Medium Boldness)
  • Financial stocks are up 23% YTD versus 13% for the S&P
  • TRUE: 3/11; Running $1 Yield = $0.55
High beta will underperform (Medium Boldness)
  • S&P High Beta index up only 5%
  • TRUE: 4/12; Running $1 Yield = $0.67
Buy China, Short India (Medium Boldness)
  • India ETFs are up around 27%, while China is up only 13%
  • FALSE: 4/13, Running $1 Yield = $0.62
Buy ETFC, IFF, K, STI, and LNC — M&A targets (Medium Boldness)
  • While none have been acquired, they are up 28% on average
  • TRUE: 5/14; Running Yield: $0.71
Buy LM, TROW, BEN — Mutual fund inflows return (Medium Boldness)
  • Up 18% on average
  • TRUE: 6/15; Running Yield: $0.80

Final Tally: 6 of 15 predictions correct; $1 Yield = $0.80

Interestingly, if Kass had just stuck to financial predictions, he would have been 6-for-11 with a very solid $1.09 yield.

 

We are now tracking more than 120 pundits on PunditTracker.com. With the 2013 Predictions rolling in, check out all the latest predictions and enter the PT Challenge to compete with the “experts” and win prizes.

 

 

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1 Comment


  1. Why follow this guy? He runs only 200M. he’s irrelevant. Who cares about his surprises. What’s this guy ever done? Don’t waste our time.

Trackbacks

  1. Reviewing Doug Kass's Surprises for 2013 | Pundits and Predictions Blog | PunditTracker
  2. Grading the Pundits’ 2012 Predictions | The Reformed Broker

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