Does anyone anywhere know anything?

A reader asks: Does anyone anywhere know anything?

Archer replies: Don’t ask me. It’s all very confusing. Take the most recent jobs report from the Bureau of Labor statistics. There were 339,000 new jobs created in May, according to the government. Predictions were for 190,000. In April the numbers were 180,000 expected, 253,000 actual.

There are lots of highly educated people at work every day to forecast this but they’re wrong at least as often as they’re right. So what’s the point? The highly praised movie Everything Everywhere all at Once, explores the nature of string theory, which posits an infinite number of realities, some seen, others not. It may be that Wall Street’s economists and market strategists are operating in one or more of these alternative worlds, where their predictions all come true.

Recession forecasters have also been everywhere all at once. Legendary investor Stanley Druckenmiller has been expecting a 2023 recession since last year. In that he joins other A-list names like Ray Dalio (“end of the credit supercycle”) and Jeff Gundlach (“full on recession”). Here’re a couple of news stories ripped from today’s headlines. From March 16: “Goldman Boosts US Recession Odds after Slashing GDP Forecast.” From June 7: “Goldman Pares Probability of US Recession to 25 Percent.”

This kind of shape-shifting is typical of the investing world, with economists and strategists forever changing their contours. Still, there’s a threshold, a sell by date for prognostications, or at least there should be. Once you move past that they are functionally useless. Do you go to cash now for something that might not happen for twelve months? For three years? What do you give up in the meantime?

Wall Street being nothing if not creative, there have even been efforts to monetize this habitual wrongness. One of the more amusing is the Cramer Inverse ETF, the investment equivalent of the “Bizarro World” episode on Seinfeld, where everything is opposite. Basically the strategy is to short longs as favored by CNBC’s Jim Cramer (“buy buy buy!”), and go long his shorts (“sell sell sell!”), according to Matthew Tuttle whose firm introduced the fund (Ticker: SJIM).

The downside, as Tuttle has put it, is that someone has to watch Cramer’s show. The upside: entertainment value, for sure, but so far not a lot more. Since rolling out in March of this year the fund was down slightly through June 9 while the S&P 500 was up a bit over that same period. Sometimes the profits are in the intangibles.

These exercises in kabuki are all good fun, but while the forecasts intersect with reality only sometimes they impact behavior more frequently. Individuals buy and sell stocks and bonds. Institutions reposition their portfolios in anticipation of predicted outcomes. Markets bounce around. Mistakes are made.

There’s a lot of struttin’ and frettin’ going on, is all I can say. So what does it signify? Who knows? My advice (not for investment purposes): don’t go all in on anything. Keep a chip and a chair.

Woof.