As if TheStreet.com didn’t already have enough troubles with the SEC investigating their accounting, another Street veteran, Doug Kass, joins the pile of fools who have tried to make prophetic claims regarding the stock market. (Nouriel Roubini is still my favorite.)
On August 26, 2009, Kass authoritatively proclaimed, “Markets top during times of enthusiasm. I believe that the markets are now overshooting to the upside and that the U.S. stock market has likely peaked for the year.”
On September 30, 2009, Kass went one step further to declare his market top call “mission accomplished”. Wow. That’s some chutzpah for a guy who has lived long enough to know markets tend to humble those who think they possess a sixth-sense.
Although Kass was very wrong on this call for a while, I gave him the benefit of the doubt because the markets were still within a reasonable point of his call. However, now we are 7 months down the road and the markets have yet again broken out to new highs.
Like Nouriel Roubini and all the others who have procured a loyal following of fans, Kass has seemed to magically make his correct picks stand out while erasing his horrific ones with the mind-eraser from the movie Men in Black.
Don’t believe or want to believe me? Here is the case in point:
1) Doug Kass’s “Generational Low” call (which is much too early to judge) has spread through the financial media like swine flu traveled the globe in 2009. However, you wouldn’t have had any spare cash to invest if you followed Kass into the following conviction trade.
2) In January of 2008, Doug Kass was absolutely blind-sided by the depth and reality of the banking crisis when he told the entire known Universe to “Buy the Financials. Yes, Buy“. (The next day he said, “Buy Citigroup for a Rainy Day” while C was trading near $26 — we all know how that ended.)
3) The third major call was his market top call referenced at the start of this article (which, again, was most likely not investable to those who lost over 50% of their portfolio following Kass’s rationale that financials were a “buy” in January 2008 because investors had already fearfully overreacted).
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According to the math I learned in Kindergarten, there’s not too much to get impressed about if you traded Kass’s calls. Moreover, he is absolutely not “Right as Rain” as Jim Cramer and TheStreet.com claim in this ad lifted from their website 5 minutes ago:
Actually, this is much more like false advertising. But I will leave that up to the SEC to share with the FTC as they continue to unravel the ugly ball of yarn in the C-Suite at TheStreet. (I feel sorry for the real journalists over there. More credible outlets should come to their rescue.)
For now, I will merely point out that Jim Cramer’s Real Money has had some serious account-crushing blunders for investors:
1) Jim Cramer himself has a gift for recommending companies which later go bankrupt.
2) Lenny “Nails” Dykstra went bankrupt and admitted he had no idea what he was doing as an investing pundit for Real Money.
3) Doug Kass (see above).
If these people can’t beat an index, don’t get sucked into their scam. It’s a numbers game with a high churn rate. Now if someone would just correct those ads.
* For the record, I am not attacking Kass ad hominem. I’ve heard he’s a very nice person. But being nice and being right are two separate issues.