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Jeff Reeves's Strength in Numbers
Opinion: I admit it — these are my 5 dumbest investment calls of 2020
Published: Dec. 16, 2020 at 4:01 p.m. ET
By Jeff Reeves
I was wrong about COVID-19’s impact on the S&P 500, about marijuana stocks, about bitcoin and more
Since 2017, I’ve made it a point to end each year on MarketWatch by recapping my predictions and investment advice. And perhaps unsurprisingly, the most amusing part for folks (including myself) is observing at how off-target some of those calls were.
Like any pundit, I’d prefer to think I get more things right than wrong. Like in May, I told folks Tesla’s run was far from over. Shares are up about 300% since then. I also highlighted the growth potential of dynamic small-caps, including Celsius Holdings CELH, +0.48%, which has soared 500% since my recommendation, and Overstock.com OSTK, +6.63%, which has jumped almost 300%.
But all Wall Street analysts think they’re pretty hot stuff, so I won’t bore you with supposed proof of my competence. Instead, let’s get right to the good stuff — my five dumbest pieces of advice from the last year.
Doubting the COVID (market) rebound: I was very reluctant to trust the quick snap-back for markets in March and April, particularly given early predictions that the pandemic could suck $1 trillion out of the global economy. But I made the mistake of thinking about the implications for regular folks and small businesses — not the stock market.
The hard reality is that poor people have been hit hardest by the pandemic, but poor people don’t own stocks. Similarly, megacap corporations are just fine even as small stores and restaurants have been forced to close. White-collar employees continued to get their 401(k) match, and structural factors that overweight well-off tech firms in indexes like the S&P 500 SPX, +0.58% added to momentum for stocks even as the economy suffered very real damage.
The bottom line is a brutal reality that I often have trouble acknowledging: Wall Street is fundamentally divorced from the real U.S. economy, and it’s perilous for investors to conflate the struggles of regular Americans with the performance of the S&P 500. As depressing as that is to admit, COVID-19 proved once again how true this is.
Betting against bitcoin: In February, I warned that bitcoin was having a moment but could run out of gas and disappoint supporters yet again in 2020. But the cryptocurrency BTCUSD, 0.35% continued to outperform traditional financial assets in 2020, roughly doubling to $20,000 since my column.
That’s in part because of folks looking for alternative assets out of a fear that a pandemic-driven economic crisis would hit, but also because of continued institutional demand as bitcoin continues to mature and win legitimacy as a viable asset in the admittedly volatile world of crypto.
Giving up on oil stocks: After the stars aligned to briefly drive oil prices negative in early 2020, it seemed a terrible idea to go hunting for bargains in the oil patch. In addition to short-term problems including dropping demand thanks to coronavirus and surging supply thanks to OPEC’s reluctance to cut back production in March, there remains the long-term risks for fossil fuel stock amid global warming concerns.
But a historic 10-million-barrel-per-day cut a month later coupled with normalizing demand propped up oil prices, and oil is back in the high-$40 range — with analysts at Goldman Sachs predicting crude could hit $65 next year. I gave up on oil stocks, however, and among the picks I specifically warned against was Halliburton, which has surged 50% since I advised against the stock in June.