Yesterday in this space, I wrote:
"Sometimes you just have to admit when you're wrong. It's not easy, and it's not fun, but that's just the way it is. Sir John Templeton's advice has outlived its usefulness. The old rules no longer apply. I'm sorry, Sir John, but this time it IS different. VERY different"
I also predicted that house prices would double by mid-October (October 15, to be precise) and that interest rates would fall to 0.1% two days earlier.
At the end of the piece I also suggested that investors should listen to Gordon Gekko rather than Warren Buffett or Templeton.
If you were reading the article with an air of disbelief, I hope that last bit tipped you off!
(In fact, I hope the graph that just showed unlabelled bars heading skyward, with a helpful red arrow did the trick, first!)
Yesterday was April 1st. Yes, April Fool's Day… the most Foolish day of the year, and the time each year when we play our annual prank.
We like to have a little fun at The Motley Fool – after all, we set out to educate, amuse and enrich – but also to make a serious point. We like our jokes to give you a laugh but also contain a message.
This year's joke centred around three key points:
1. Predictions are next to worthless
You've heard it before – many times. Year-end predictions for the ASX 200. Forecasts for the iron ore price. 12-month price targets for ASX-listed companies.
How many times have you heard someone 'fess up to getting those wrong? Or actually being right? How often can you access that person's track record of 'predictions' to see if they're worth listening to? Exactly. And as a general rule, the more specific the prediction, the less you should listen!
2. Be careful of 'it's different this time'
Our article took great delight in skewering Sir John Templeton's quote "The four most dangerous words in investing are 'it's different this time'". We did so – jokingly – specifically because we think it's actually spot on! Those who tell you that it's different this time are – more often than not – going to be wrong.
The tech boom was based on 'new economy' business models that weren't worth the paper they were written on. The GFC was caused by bankers, brokers and home owners who, through financial alchemy, tried to create wealth from thin air. Industries change, as do consumer preferences. The rules of investing don't.
3. We are just a little worried about the housing market
Part of the reason we chose housing for our joke is because we are worried about the rate of price growth and the expectations people have for that to continue. We're not predicting anything, but mortgage repayments can't grow ahead of wages growth forever, and the tailwind from structural underpinnings of price growth (second incomes and historically low rates) can't blow forever. In short: be careful, Fools!
Foolish takeaway
As Fools, we take our work seriously, but not ourselves. We hope you enjoyed our little joke, but we also hope you took some lessons from it, too. Motley Fool Housing won't be launching after all, so we're going back to work… and counting the 364 days until the next April Fool's Day!
