Each year, I make a list of what I got wrong in the past 12 months. Publishing this in the full light of day allows me to own my mistakes and learn from the experience.
I have been doing this for about a decade. It is very helpful to my “process”; I hope you find something useful in it as well. On to the mea culpas:
1. Trump won’t hurt the stock market: I have written fairly extensively about why mixing politics and investing is such a bad idea. It’s emotional, not objective and has shown poor results over time. As I said before, moves in financial markets usually have little to do with normal presidential actions.
It took me until December to acknowledge that Donald Trump isn’t a normal president: He complained about Federal Reserve interest-rate increases after he replaced a dovish Fed chief with a hawkish one; he ran up the deficit during a boom, when he should have been paying it down; and he started what is beginning to look like a protracted trade war with China, after boasting it would be easy to win.
2. Buying emerging markets: They had been my default answer to “Where should I put cash to work today?” I have suggested that emerging markets were a great long-term play and that low valuations would revert to the mean, eventually. Maybe you might look foolish for a few years, I figured, but in a decade or two you will look like a genius.
Well, it has been a few years, and the foolish part seem to be true. We’re still waiting on the genius part.
3. Infrastructure: Yes, I figured that this would be something Trump, the self-anointed master builder, could get this one done. Blame my wishful thinking on hoping to see a modern rail, road, airport and electrical-grid system that befits a great nation. Nope.
Just one year ago I wrote that even the U.S. Chamber of Commerce, which often aligns its policy stands with those of the Republican Party, was pushing this and even took the heretical position of backing a higher fuel tax to help pay for upgrading infrastructure. This idea died almost as soon as it was raised.
Enough of my slam-dunk mistakes. There is another category in which there’s a good chance I was wrong, though a final determination may not be possible to make:
1. Facebook’s role in the 2016 election: Shortly after the 2016 presidential election, I suggested that the social network didn’t determine the outcome of the election. Sure, it spreads fake news, but I figured it changed few, if any, minds.