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Astounding upon astounding: that is how the 2011 leaderboard for Apex, the Metal Bulletin service that tracks the performance of over twenty top base metal price forecasters, appears when you consider it coldly.
Astounding first, because the top five analysts all called base metal prices, as traded on the London Metal Exchange, with an accuracy of over 92% in 2011, averaged out quarter by quarter.
This is very impressive because to achieve an overall accuracy of 92%, each of these analysts had to call the market with a high degree of accuracy over four consecutive quarters. Each poor quarter makes a high average harder to achieve.
Just over three percentage points separated Metal Bulletin Research (92.6% accurate) in fifth place, from Ed Meir of INTL FCStone (95.8% accurate) in first place.
The brokerage analyst and the independent researcher were separated by big names in banking and commodities: Deutsche Bank (94.1% accurate), Citigroup (93.4%) and Standard Bank’s Leon Westgate (93.1%).
Astounding second, because of the success of Metal Bulletin columnist Ed Meir, who topped the table for every price in the base metals market in 2011, bar aluminium, where he came third.
Of course, base metals analysis is about more than price forecasting, which black swan events and the complex interactions that drive metal markets make so challenging.
Analysis is about individuality and confidence – Ed Meir talked in his victor’s interview with Metal Bulletin about ignoring the “upside hype” and questioning models that did not provide results.
It is about knowing which concepts and events are important and backing this understanding. Citigroup’s Heath Jansen touched on this when he talked about putting “the research behind the idea”.
And, as Deutsche Bank’s team of Daniel Brebner and Xiao Fu testify, it is about looking at supply and demand of particular metals against a wider backdrop of the economy and other assets.
(It goes without saying: it’s also about doing all this with the verve and command that can capture the attention of markets and clients.)
In fact Jansen and David Wilson of Citigroup concurred with Deutsche Bank on the necessity of allying high-grade information on fundamental factors and individual metals with a macroeconomic sense of financial markets, and how they will work together to move metal prices.
Still, Meir’s success in calling prices last year must be recognised as of equal significance as the incisive, cogent commentary that he produces daily for his clients and for Metal Bulletin readers.
Because, after all, that is what it is all about for producers, consumers and traders, and their financiers.
Prices: where are they moving? And who can call them accurately?
Meir did it in 2011, Apex has the results (and Meir the framed certificates) to prove it.
Let’s see what happens in 2012.
Alex Harrison aharrison@metalbulletin.com Twitter: @alexharrison_mb