Forecasting Has Its Pitfalls and 2012 Will Prove No Different

A bunch of hedge fund managers, most who probably don’t give a tinker’s damn for much beyond the bottom line anyway, has a lousy year, and the world is coming apart.

Politicians around the globe act like politicians, dawdling and fiddling in the face of stress, and the sky is descending post haste.  Hedge fund managers and politicians share at least one commonality; they both love excuses.

Somebody once pointed out that 80 percent of the work that gets done in the world everyday gets done by people who don’t feel all that good. Maybe that number is a bit high, but it illustrates an important point. Things are not always what they look like.

The Euroland mess has dominated the news for weeks now and just about anyone who claims to have the cure has had his or her say. Some argue it’s the cluck-headed Germans and their insistence on fiscal responsibility. Others suggest the restraint on the European Central Bank should be eased so they can print money much like the US Federal Reserve. Problem is someone forgot to ask the Brits and the Fins.

One scribe, Henry Blodget, the discredited former Merrill Lynch sell-side analysts who was publicly hawking tech stocks during the tech mania he privately believed were POS, recently penned a rambling piece trying to prove that the wealthy don’t create jobs. Now the CEO of a financial news outlet, Blodget cited a wealthy dude to buttress his case. It’s a screed all about taxing those filthy wealthy folks who never pay their fair share of anything.  Simple translation: we need higher taxes to offset higher spending Keynesians always love when the warm rubber begins to melt as it hits the freeway. When is the last time you were hired by someone or some company poorer than you?

The point here is there is no shortage of opinions and there never will be. Nor will there be a paucity of forecasting for 2012.

But there is certainly lots of uncertainty heading into 2012 and the European mess is only part of the story: A hard Chinese landing, gridlock in DC, sounds like a movie title if you close your eyes for a second and let your mind wonder; jobs, housing, consumer spending, corporate profits, to name a few of the more mundane. And of course there is usually a surprise or two waiting just around the corner of Wall and Broad Street. Don’t forget: 2012 is also an election year. The language debasers will be afoot in full force.

What about King Bernanke and his minions at the Fed ?  What will they do? Will bond yields go up or down or just sort of lay there, lame and limp, like our elected officials? Is there anyone still left who hasn’t refinanced his or her digs? Will the dollar gain more testosterone or is it about to succumb to a bad case of ED? And what about gold, the yellow stuff some think will trade in 2012 between 1,300 and 2,000? And then there are all those emerging markets that for the most part suddenly stopped emerging in 2011. And who will be the 2012 Bill Gross poster child? And what sector will lead the parade?

The Omaha Hypocrite, Warren Buffett, rolled into Californian a few years back and suggested the state’s property owners needed to pay higher property taxes. Buffett at the time had a place in La Jolla, a wealthy seaside town just north of San Diego and he claimed the taxes on his Omaha residence were higher than those he was paying for his swanky California place.

Now Buffett is supposed to be a smart guy.  Assuming Buffett and his secretary both live in Omaha, given their heavy tax burden, not to mention the lousy weather, perhaps both should consider moving; hopefully, however, not to California. We already have our fair share of kooks.

Still another point to Buffett’s hypocrisy, one recently noted by a fellow billionaire, Buffett’s whole strategy, buy and hold, is not only well known but calculated to avoid paying any taxes so that when he dies it all goes to a foundation and he won’t have paid taxes on any of it. Meanwhile, he certainly enjoyed the fruits of his labor, but like most people on the left apparently doesn’t want anyone else to enjoy theirs.

It’s still a few months before the ides of March, but that doesn’t mean investors shouldn’t be alert.  Forecasting is a lot like a good saloon brawl. Anything can happen and it often does.