MOM AND POP IN 2014

Mom and pop is referring to inexperienced investors who play the market casually. Beginning of 2014 they were asked about their expectation of different stock markets. They had to forecast which region will be the best and worst performer in 2014. Closely to the end of the year is a good time to check those typical small investors had right or they were wrong. I have to tell you first of all that they are mostly wrong, that is statistically proven and the pattern occurred more or less the same this year again.

This list was made in January – from best to worst:

1. US
2. EU
3. Japan
4. UK
5. China
6. India
7. Russia
8. Brazil

This week Deutsche Bank came out with this chart below of the winners and losers of the market in 2014 to date. And the chart shows the current situations in the markets – from best to worst:

1. India
2. China
3. US
4. EU
5. Brazil
6. Russia
7. UK
8. Japan

All in all, moms and pops were again mostly wrong, the closest shot was Russia. Here is the 2014 January and November scores and rankings:

Recent reality            January 2014

1. India                        6.
2. China                      5.
3. US                          1.
4. EU                          2.
5. Brazil                      8. 
6. Russia                     7.
7. UK                          4.
8. Japan                       3.

They said India will perform poorly, but the fact is that it has been the best performer in 2014. They were really sceptical about Brazil, but that was not a bad year for Bovespa. They were positive about Japan, but finally the Nikkei is still in -4%.

So being contrarian against the mass might be a good strategy? Yes, I strongly recommend that.

The BFM Assets Team.