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In this issue:
- Global Equity Market Performance
- Krugman
- Cramer
- Schiff
- Spitznagel
- December So Far
- Wrapping Up
Global Equity Market Performance
November’s ranked equity index performance was exactly the opposite of October’s. The S&P/TSX 60 was up a solid 3.8%. MSCI EAFE gained 0.7% just edging out the S&P 500, up 0.3%. MSCI Emerging Markets lost 2.2% after rallying more than 12% over the two prior months.
As of this writing—the second week of December—our systems are indicating positive momentum in all four equity markets.
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 where we assess the pundits’ 2025 predictions.
Krugman
This is the fourth year of our December tradition.
For many years, Paul Krugman managed the dubious feat of making some of the worst predictions of anyone in the business of predicting.
It is very hard to find a benchmark of failure higher (lower?) than this beauty from 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.
Krugman, an economist, used to be an opinion writer for the New York Times. Sadly last December he wrote his final column.
If it appears we’re being too hard on the fellow, the lack of self-awareness exhibited in this opinion piece should put that to rest.
Apparently, he has moved to Substack. We haven’t put in the effort to subscribe—not that there’s anything wrong with an independent platform. Following him just isn’t fun anymore. It’s too easy.
Cramer
It wouldn’t be a proper roast without good old reliable Jim Cramer of CNBC fame. He’s been a top contender for three years running. No introduction needed, but his most famous (infamous) prediction is too good to ignore.
Source: Hedgeye
Whoops. Impeccable timing.
The internet says Cramer still pulls in around $5 million a year from CNBC. That makes him fair game. Too many gems to pick just one, so here are some from a few days in January.
Here is a quick Nvidia timeline.
January 22: On Mad Money he said Nvidia could be breaking out higher.
January 27: Nvidia plummets 17%, wiping out nearly $600 billion in market cap—the biggest single-day loss for any U.S. company ever.
January 28:
Three weeks later it was up 23%. Anyone dizzy yet?
The same day Nvidia tanked he told viewers: I own bitcoin, you should own bitcoin, it’s a great thing to have in your portfolio.
Uh-oh. By early April bitcoin was down 28%.
Full disclosure: we hold bitcoin in some of our portfolios.
Cramer might knock himself off the repeat-offenders list, but that’s doubtful.
On to a prognosticator we introduced last year.
Schiff
Peter Schiff, CEO of Euro Pacific Asset Management and frequent financial commentator, earned his reputation by predicting the 2008 financial crisis—and getting it right. What catches our eye, though, is how he handles being wrong. When challenged on X about his long-standing bearish stance on bitcoin (he calls it worthless), he posted:
That’s the kind of statement that raises concerns about his thought process.
Late last year, seemingly frustrated with his bearish position, he lamented that the only reason bitcoin traded above $100,000 was the government.
The thing about punditry: if you’re going to participate, own your mistakes—or don’t play. Blaming one thing for another isn’t helpful when managing risk. Also, maybe avoid words like “never”.
Note, he’s been right about gold. We own that too—which induces a bit of Cramer-like dread.
So far this year, as of December 12, bitcoin is down 3%. If he is short, that isn’t much relief.
Perhaps, next year at this time we can cheer his bullish call on gold, which is up 63% this year.
We don’t want to run out of prognosticators to track, so here’s a new one.
Spitznagel
This is a tricky one because Mark Spitznagel has made some great calls and profited immensely from them. The bear markets of 2000 and 2008 were two of his most prominent.
He’s the Chief Investment Officer of Universa Investments. According to Finews, reporting on S.E.C. filings this year, the $20 billion fund’s audited average annual return is over 100 percent since its 2007 inception.
In January he told Business Insider that he thinks the worst stock market crash since 1929 is coming. He thinks there is a credit bubble and bubbles pop. And when that happens, stocks will collapse.
So far, that hasn’t happened.
Maybe he will be right. But, if you don’t know what you are doing, follow headlines and hope for results, you probably won’t be in business for long.
Stay tuned.
December So Far
On December 7, Reuters reported that UBS was closing funds with exposure to First Brands—the auto parts business we covered in last month’s letter—that filed for bankruptcy in September. According to U.S. court filings, UBS has more than $500 million in First Brands exposure.
On December 10, the Federal Reserve cut its target range for the federal funds rate by 25 basis points to 3.5% – 3.75%. This was widely expected. The S&P 500 rallied modestly that day, but as of Friday December 12, it had given back its gains and was close to flat on the month.
Earlier in December, Michael Burry appeared on Michael Lewis’s podcast. Burry, featured in Lewis’s 2010 book The Big Short—about the Global Financial Crisis—hadn’t given an interview since the movie adaptation premiered in 2015. He was one of the first to actively bet against the subprime mortgage market.
In November CNBC reported, incorrectly, that he had made a $912 million bet against Palantir Technologies, one of the hottest names in the AI business. This came from S.E.C. filings his investment fund was required to make. The actual bet was $9.2 million. Reporters are apparently unable to understand options contracts. It made a good headline though.
He has since closed his fund, freeing him to post on X and give interviews. He’s very bearish on the AI sector in general—and Nvidia is also in his sights.
Those are predictions, but he has skin in the game. So he’s less a prognosticator than a practitioner with a track record—like Spitznagel.
We will revisit Burry and Spitznagel in a year. Schiff has a good chance since he likes gold and hates bitcoin. Krugman and Cramer, probably not.
Wrapping Up
We don’t make predictions. But we enjoy the show. Predicting isn’t necessary to manage risk.
Thanks for reading this far. We hope you enjoyed it — and we wish you an excellent holiday season, Merry Christmas, and Happy New Year.
Let’s wrap this up with a quote attributed to Mark Twain, Niels Bohr and Yogi Berra. That’s almost like the start of a joke: an author, a physicist and a baseball player walk into a bar…
“It is very difficult to predict – especially the future.”
We will see you again in 2026—that much is predictable.
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