If you’ve ever paid any attention to forecasts involving the markets and economy, you’ve probably realized that most of them are far from accurate.
Making time and price specific predictions about the stock market or performance of the domestic or global economy, in my not always so humble opinion, is one of the dumbest things an investor can do.
Too many variables, and too many oh so human people, factor into what happens in the markets to make the folly of forecasts obvious.
However, I do like reading informed discussion and observations about where we are now, what the probabilities are of events unfolding, and what types of investments may or may not succeed in the months and years ahead. There is a massive difference between the two.
I especially like reading these observations from people who are very smart and have a lot of skin in the game. In other words, if they are right, they stand to make a lot of money. However, if they are wrong, they could potentially lose a lot of money. It’s not a merely academic discussion.
That’s why I want to take some time today to discuss KKR, the one particular private equity giant whose observations can actually help us profit…
We talked previously about how not to play earnings season.
I told you that you shouldn’t play earnings whatsoever.
So it may surprise you to know that earnings season is actually a pretty busy time for me.
It’s not because I am drawing lines on charts, looking for some magic nugget that allows me to predict how the price of a stock is going to react to the accuracy of some analysts guess about the short-term earnings of a particular corporation. That’s madness.
But here’s what I actually do:
I read hundreds of earnings call transcripts every quarter to get a sense of what is really going on in the world. The CEOs of the companies doing business in the world have a much more accurate understanding of the economy and social and demographic trends than some clown on TV or some economist who hasn’t left his Wall Street office except to get in his limo to take him back to his home in Greenwich.
Today, I want to share with you one set of transcripts, which reveals why one particular industry could dodge a recession…