August 6, 2017 marked the one-year anniversary of the now infamous Barron’s article entitled Billionaire Bears in which Barron’s and five well known institutional money managers did their best to scare investors out of their long-term equity holdings.  Bill Gross, Stanley Druckenmiller, George Soros and Carl Ican all affirmed their negative sentiment on stocks, but none were more vocal than Jeffrey Gundlach, head of DoubleLine Capital, who advised investors to “sell everything”.   

Investors who took the advice of those supposedly market gurus last year paid dearly as broad U.S. equities gained about 15% (including dividends) in the twelve months following that Barron’s article.  International markets did even better. Gundlach, who CNBC calls a Five-Star Fund Manager and The New Bond King, was interviewed again this week and predicted the market will drop 3% at a minimum between now and November.  Big deal.  A 3% drop in the market is well within norms and would not make him clairvoyant by anyone’s definition.  There was no mention of his now disastrous 2016 market call, nor the harm inflicted upon Barron’s readers who might have taken his advice.

What are the lessons here?  First, no one, regardless of their pedigree, knows what the markets will do in the short-term and anyone who says they do is either trying to sell you something, an idiot, or both.  Second, your personal holdings must reflect the optimal risk/reward balance needed to offer you a reasonable probability of attaining your goals without unnecessary risk. Third, the only people from whom you should take advice are those individuals who have an unconflicted, vested interest in your success.  That would include your financial advisor, assuming you have fully partnered with one.  Your advisor knows your goals, the resources available to fund those goals, your risk profile and other intimate details that can only come from numerous conversations and planning sessions over a long period of time.

Successful investing is not complicated, but it is never easy.  It helps to have a plan that you review on a regular basis and it requires that you ignore the noise generated by the financial media like CNBC and Barron’s whose only mission is to sell advertising. They rarely hold those same “gurus” accountable for the bad advice they spew out ad nauseum.  I wonder to whom the investors that took the advice offered by the Billionaire Bears turned once that advice proved worthless?