The old saying goes that “hindsight is 20/20″. Many people think that 20/20 vision supposedly means perfect, but it just means “normal.” In the ophthalmologic sense - to have 20/20 vision means that when you stand 20 feet away from an eye chart - you can see what the “normal” human being can see from 20 feet. (in metric it’s called “6/6″ vision). So what is 20/200 vision? In the United States, 20/200 is the cutoff for “legal blindness.”

In the figurative sense, “20/20 Hindsight” suggests that if we look backward, we have full information and everything is suddenly so obvious, regardless of what we thought in the past as things happened and we had imperfect knowledge. Usually, the term is sarcastic in response to criticism of a decision and implies that the critic is unfairly judging the situation.

Investors are fond of saying “The market looks forward, not backwards.” As I have written before, that concept is grossly misused. It’s a great way of forgiving serious forecasting errors in the past and ignoring the serious realities of the present and dreaming of better things to come in the future. The problem comes when investors listen to today’s pronouncements from commentators who were so wrong in the past. I’d prefer that each of you and for that matter, every investor would make up their own mind after doing their own research and analysis instead of blindly following the thoughts of others. That goes for whatever I write as well.

This morning, Bloomberg’s Betty Liu interviewed Douglas Altabef, Senior Managing Director of Matrix Asset Advisors, and asked (I am paraphrasing here) - .”…inflation really starting to hurt companies. How can you see a market rally with that possibility?” The response went something like - “Well, let’s remember what the market is - which is a forward indicator. And the market started to sell off last July anticipating what we are in right now - which is economic slowdown. It might be a recession - it might be a slowdown. We will only really know that in retrospect.”

I almost fell over laughing at that one. First of all, I won’t remind you why the market started declining last July but I will suggest it wasn’t due to foresight or anticipation.

Please click on this link and hit the play button to watch the Bloomberg video so you can see and hear it for yourself in its entirety.

In light of that commentary, let’s evaluate his previous comments on Bloomberg over the past year. 20/20 or 20/200? You decide. Did Altabef forecast inflation problems last year or the rising cost of oil or that the economy would slow because of those factors or that the subprime/credit crisis would hurt the economy and the stock market?

On oil, inflation and the stock market:

Douglas Altabef from Bloomberg’s archive on June 14, 2007 (almost exactly 1 year ago).

“The core news was as expected,” said Douglas Altabef who manages $1.7 billion as senior managing director at Matrix Asset Advisors Inc in New York. “If you contextualize the higher number and say it’s because of energy, then focus on the core and it’s steady as she goes.”

Douglas Altabef also from Bloomberg’s archive on June 14, 2007 snippets from the article Matrix’s Altabef Says Energy Prices Not Affecting U.S. Stocks

“The market has been living with oil at 60-plus dollars a barrel for two years now. I don’t think that the shock factor is going to be very significant. I think there’s really more of an effort to look at the overall economic picture.” “The fact that we had a higher-than-expected PPI number today, mostly due to energy prices, and that the market is up so high this morning tells you something about the resilience of the market, vis-a-vis energy prices.”

On subprime, financial stocks, the credit crisis and the stock market:

Douglas Altabef from Bloomberg’s archive on August 27, 2007 snippets from the article Matrix’s Altabef Says Stock Market May Have Overcome ‘Hysteria’ or you can click here and watch the video.

“I don’t know if we have seen the worst, but we have probably seen the worst of the hysteria” in the stock market.”In a moment of hysteria, the market paints with one brush. It doesn’t differentiate between the great, good and mediocre,” though once we get over that and reach the stage of anxiety, “there is selectivity. People start to look again and see where the opportunities are.”

“I do think that we have come into a time where people are starting to step back and are looking at the overall economy” and realize that, so far, the subprime issue “did not sink the economy. It may have slowed it down, but it did not stop growth. And we do not think this will stop growth.”

Douglas Altabef from Bloomberg’s archive on December 18, 2007 (click here for the video). In it he suggests that financial stocks would do well in the next few months and the selloff in their shares was “overextended”.

20/20 Hindsight is “normal”. A “normal” person can look back and see what happened over the past year and know all that there is to know. We should all do that. We should learn what we did not have the foresight to predict and maybe it will make it better the next time. However, we should never look back and be blind about what really happened. That is 20/200 Hindsight. More importantly, we should never use that failed assessment of the past to predict the future.