At Inukshuk Capital Management, our focus is on building lasting relationships rooted in trust and collaboration. By focusing on active risk management and long-term value creation, we help families and institutions achieve financial sustainability.
Stay up-to-date on the latest developments by following us on LinkedIn here.
December 2024 – Prognosticators
In this issue:
- Global Equity Market Performance
- Rumble in the Jungle
- Jim ‘Sleeves’ Cramer
- Paul ‘Prizefighter’ Krugman
- A New Contender
- Wrapping Up
Global Equity Market Performance
After an unimpressive October, equity markets in North America had a great month with the S&P/TSX 60 leading the pack up 6.4% and the S&P 500, 5.9%. The rest of the world did not fare as well. MSCI EAFE was up 1% but Emerging Markets fell 1.5%.
The S&P 500 was already up 20% by election day, November 5. It looks like Mister Market needed a little political clarity before pushing higher.
Our systems remain fully long both the S&P 500 and the S&P/TSX 60.
If you would like to stay current on our measures of trend and momentum in the markets we follow, please click here
This letter is our annual prognosticators edition. The usual suspects are included. But this year they’ve been granted ring names. And we have a new contender.
Rumble in the Jungle
To keep track of what someone said a year ago, you usually need to keep notes. For these two heavyweight prognosticators you don’t have to bookmark anything. They make things easy.
Let’s see what amateur prognosticators should aspire to.
In the blue corner, we have Paul ‘Prizefighter’ Krugman. An economist and opinion writer for the New York Times.
His past titles include, from all the way back in 1998:
The growth of the internet will slow drastically… By 2005 or so, it will become clear that the internet’s impact on the economy has been no greater than the fax machine’s.
Knockout?
His excuse: he claimed he didn’t really know that much about technology. Ok, sounds fine from a supposed Nobel Prize winner.
In the red corner we have CNBC rolled-up-sleeve ranter, Jim ‘Sleeves’ Cramer.
It’s said a picture is worth a thousand words. Here’s a picture:
Source: Hedgeye
His timing was impeccable. Bear Stearns imploded a few days later.
After being called out on that, he claimed he meant if you had an account at Bear your money would be safe. Ok.
It’s not clear who takes the prize, but this is the gold glove standard.
So, what have these champions said lately?
Jim ‘Sleeves’ Cramer
Every year, for some reason, Sleeves is asked about his ‘Crystal Ball’ predictions.
In January of this year, Yahoo Finance reported that Sleeves said the artificial intelligence and enterprise software “bubbles will be popped.”
We covered AI and its poster child, NVIDIA last month.
Once more with a ‘thousand words.’
Whoops. It looks like NVIDIA outperformed the Nasdaq 100 by more than 150%.
Our investors have benefitted from owning the Nasdaq 100 and the S&P 500 of which NVIDIA is a large component. But we don’t pick stocks. And we don’t predict.
As an aside, Sleeves proclaimed on X (formerly known as Twitter):
Bitcoin is up 125% since then and is trading just over $100,000 as of this writing.
Time to head to the crystal ball shop and trade that one in.
What does Krugman think?
Paul ‘Prizefighter’ Krugman
Prizefighter has (had) a pulpit at the New York Times where he has been adamant, for years, that bitcoin is worthless.
He wrote this in 2018 when it was trading around $14,000:
Early investors in a bubble make a lot of money as new investors are drawn in, and those profits pull in even more people. The process can go on for years before something—a reality check, or simply exhaustion of the pool of potential marks—brings the party to a sudden, painful end.
He’s not wrong about bubbles. They happen. If anyone can determine how ‘early’ or late we are in any bubble, please let us know. However, for someone who admits they don’t know much about technology, Prizefighter seems confident in his prognostications. Must be a good paycheque.
It’s fun to make fun of the Prizefighter and Sleeves of the world, because they never admit to their mistakes. Makes you wonder about their childhoods.
Here’s some deep irony. In December of last year Prizefighter wrote this:
On December 6, last week, he ‘retired’ from his role as a pundit at the New York Times.
This is fortunate and disappointing all at the same time.
New Contender
Ladies and gentlemen, let us introduce you to Peter Schiff.
Peter Schiff is the President of Euro Pacific Capital, Inc. He’s been negative on bitcoin since it was worth a dollar. That’s some accomplishment, considering practically no one knew anything about it at the time.
The short version of his view: gold is superior to bitcoin in protecting against various economic and political risks. He may eventually be right. Who knows? We own both in our portfolios for that reason.
In December of 2023 he warned on X:
The big surprise in 2024 will not only be that the economy crashes into recession, but that high inflation will return with a vengeance.
That didn’t happen. Maybe it will. But the more concerning thing is his reaction when wrong.
Here is his response when challenged on X as to his bearish position on bitcoin:
Shoulda, coulda, woulda is one of the worst things an investor can say. And he hasn’t deleted it.
Schiff won’t need to be bookmarked. The thinking here – he will be a goldmine of material for at least a year to come. And since the Prizefighter got knocked out of the ring, we need a contender.
A ring name will be granted at a later date.
Wrapping Up
That’s all a bit negative. But it is funny and deserved. It’s funny because people still pay to listen to them. It’s deserved because they never admit to being wrong.
Here are last year’s S&P 500 predictions from Wall Street.
The S&P 500 started the year at around 4,500. It’s hard to be the outlier in this business, so kudos to Stanley and Morgan. Everyone else was kind of right. As of the end of November the index was trading at 6,000. So, everyone was wrong.
We don’t have targets for prices. Our asset allocation decisions are driven by price trends, whether through our proprietary systems or by adhering to predetermined target asset allocations.
For example, we rebalanced our bitcoin allocation last month once our target thresholds were breached due to price appreciation. The same process was followed in 2021 and 2023, when it pulled back and we were underweight. It’s the mix that matters.
Keeping things simple in a highly complex endeavour is the strategy we prefer.
It’s not necessary to predict, in order to manage risk. The same goes for long-term financial planning which is covered below.
Here’s hoping you had fun reading. And if you have read this far, we wish you an excellent Holiday season, Merry Christmas and a Happy New Year.
We will see you again in 2025. That’s something predictable. We hope.
Wealth Longevity – You Don’t Need a Crystal Ball to Protect Your Wealth
When it comes to managing your wealth or planning for the future, the allure of predictions can be hard to resist. Headlines scream about where markets are heading, what asset class will outperform, or what the “next big thing” might be. But here’s the truth: you don’t need to predict the future to protect and grow your wealth.
The foundation of sound financial management lies not in guesswork but in principles.
Diversification
By spreading your investments across asset classes, sectors, and geographies, you reduce your exposure to any single point of failure. Markets may be unpredictable, but a well-diversified portfolio offers resilience against volatility.
Discipline
Whether it’s rebalancing your portfolio when allocations shift, dollar-cost averaging into markets over time, or maintaining a cash buffer for emergencies, these systematic actions take emotion and guesswork out of the equation.
Goals
Are you saving for retirement, funding education, or leaving a legacy? Aligning your investment strategy with your objectives ensures that short-term market noise doesn’t derail your long-term plans.
Risk Management
Insurance, proper estate planning, and maintaining appropriate liquidity are crucial components of wealth protection. They ensure you’re prepared for the unexpected without needing to predict it.
In an unpredictable world, sticking to a plan and controlling what you can—your spending, saving, and asset allocation—is the best way to ensure your financial well-being. You don’t need a crystal ball for that.
Have a question? Contact us here
Challenging the status quo of the Canadian investment industry.
