No matter how 2013  unfolds, I promise you that nothing will be as dramatic, contrarian, or profitable as getting long natural gas and shorting Groupon was in 2012.  Sorry, folks!  While I don’t think that epic trade was entirely due to luck, I do think that the tremendous extent to which it worked out was totally lucky.

You guys know how I’m always preaching “never mistake luck for skill” and that goes double when it comes to making predictions. The last thing I want is for you to ascribe me with powers I simply do not possess.

The other thing I’m always preaching is that if you’re taking someone’s predictions seriously, you’re doing it wrong.  Predicting the future is impossible.  It’s an exercise in futility.  I don’t judge myself by the number of these things that come true nor should you. The point of all this is to raise interesting questions about the year ahead and to try and look at things through a slightly different lens.  As an investor, being able to do that is a valuable exercise.

I also do it because it’s fun and I like to poke fun at myself.  Plus, nothing builds character like getting up in front of thousands of people and failing.

You should try it sometime!

One of the things that worked out for me last year was the process I used.  I sought first to identify a high-probability macro-economic backdrop.  Within that, I then looked at specific areas where the consensus views didn’t quite add up or had higher probabilities of deviating from the consensus forecast.

So what are we highly likely to see in 2013?  What should our backdrop be?

We’re going to do this in two parts, first the secular backdrop and then the cyclical backdrop.  Then we’ll figure out where consensus is, identify exactly where it’s weakest, and use its own energy push back against it and throw it to the floor.

I like to call it Speculative Judo.

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Happy New Year!

I’m in the process of formulating my predictions for 2013 and should have those ready to go for next week.  I love this annual exercise, not because predictions are useful in and of themselves (they aren’t), but because the process that we use to generate them is something very relevant for the act of investing and it’s a practice we can learn quite a bit from.

While I like making predictions, I’ve never been a fan of resolutions.  Perhaps because if you have the proper processes in place, you never need to make public pledges to change your life in dramatic ways?  That said, I have some really exciting surprises planned for you guys in 2013 and I resolve to bring them to you as soon as possible.  I won’t be able to talk about it for a couple of months, but I’ve been secretly working on a new service, a separate newsletter that I think you’re really going to enjoy.  It’s a side project that was born a few years ago out of reader feedback and comments from my friends.  So far, its private audience has found it very useful and I’m hopeful that when it’s finally ready for a public audience, you’ll appreciate its utility as well.  That’s the goal, anyway.

So stay tuned this year.

Make sure you’re following us on Twitter or Facebook.

Follow @CogConcord

But for content like ours, RSS is actually my subscription method of choice.

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In the blink of an eye Christmas will be here and then New Year’s.  We’re on the doorstep of 2013.  Where did the year go?

I want to spend the next two weeks recapping not just our predictions but what happened this year and which trends and ideas dominated the marketplace.  This annual exercise is not about saying “here’s what I got right and here’s why I’m AWESOME!”  It’s about thoughtfully reflecting on what we got right or wrong, and more importantly, why we got it right or wrong.

What lessons did we learn?  What lessons didn’t we learn?

Let’s get straight to it.

2012 in Review

At the beginning of the year I outlined 4 major factors that I thought would shape the action of both the economy and the market (our first lesson is that those aren’t always the same).

1. Europe
2. The Election
3. The U.S. Consumer
4. China

In retrospect, those were indeed the right issues to watch.  But those were also fairly easy to see coming.  What matters is how you use them and the way that you interpret the possibilities.

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Next week begins my favorite exercise of the year: the annual raking of myself over the coals about what I got wrong in 2012!

You may laugh, but this is one of the most valuable things I do in this newsletter.  Far too few people in this business take this very seriously.  Plenty of pundits, analysts, or rinky-dink newsletter writers out there make predictions.  After the year has come and gone it seems like most of them spend most of their time re-interpreting history and data to suit their original forecasts.  That, or they simple sweep their misses under the rug and spend all their time shouting about how they got these other predictions correct.

What good are predictions if there’s no accountability?

To prepare for that, we need to start looking at how the year actually went.  So today we are going to look at a lot of data.  Don’t worry, I promise to make it interesting and use lots of pictures.

Let’s get started.

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