Many people have been caught off guard by recent events.
Last week, Citi analysts predicted “very limited read-across from the failure of Silicon Valley Bank to European banks”. Hours later, Citi said: “In a jittery market, following the failure of Silicon Valley Bank (SVB) in US, Credit Suisse shares have sold off by >20 per cent today.”
You can’t blame analysts for finding it difficult to keep up with a fast-moving market, but should they have seen trouble brewing before SVB’s collapse? Well, they didn’t – not one Wall Street firm had a sell rating on the stock. Creative Planning strategist Charlie Bilello notes three analysts downgraded the stock on the day it was shut down by regulators, but none of the downgrades were to a sell rating.
Markets, too, have been taken unaware. There has been a huge shift in rate expectations. Instead of rates hitting 6 per cent, pricing now suggests they will be closer to 4 per cent by the end of 2023. However, this could change again – Bilello notes markets have consistently underestimated US inflation and the Federal Reserve’s resolve in fighting it. Meanwhile, the Fed “has been no better”; at the end of 2021, it was more concerned by deflation than inflation.
Zuckerberg’s culture shift at Meta could make it hard to find new recruits willing to work in his macho organisation
Keeping sea lice from farmed fish will boost aquaculture health and profits
Bosch Unlimited 7 Aqua review: Saving time and effort on household cleaning
Irish space race: domestic companies pushing the frontiers of AI, space stations and acoustic technology
These people aren’t dumb – it’s just that forecasting is a tricky business. The experts don’t know what’s around the corner; nor do you. That’s why investors should stick to their long-term plans in turbulent times and heed the advice of indexing guru John Bogle: don’t do something, stand there.
