The insanity of many financial expert predictions

Peter Schiff, President, Euro Pacific Capital:

Predicted:  Gold prices could reach $5,000/ounce by the end of 2012.

Actual:  By end of 2012, just under $1700/ounce.

Jim Cramer, CNBC pundit, former fund manager and Wall Street stock guru:

Predicted:  At the end of 2011, encouraged investors to avoid bank stocks in 2012.

Actual:  One of the best-performing U.S. sectors in 2012; the U.S. bank index was up around 30% year-end.

David Rosenberg, Chief Economist and Strategist, Gluskin Sheff & Associates, Inc. and former Chief North American Economist at Bank of America-Merrill Lynch.

Predicted:  S&P 500 would drop back to 500 at some point and a “5,000 Dow” is possible in next couple of years.

Actual:  Nowhere near close with the S&P 500 prediction and who knows with the Dow between now and 2016.  Time will tell.

More recently David said earlier this year, “I think it will be a flat year for the broad equity markets in 2013.”  Well, those following the broad-equity U.S. market know it’s WAY up year-to-date.  Maybe David was referring to European markets.

I’m nowhere near as intelligent as Peter, Jim or David but I do know the stock market moves in cycles.  The market moves higher, lower, shoots up and then corrects.  If anyone makes the same prediction often enough and long enough they’ll eventually get their predictions right.  I’ve been calling for sunny weather for days now.  Guess what?   It’s gorgeous outside.

I think most financial news is largely counterproductive.  If you want to be a successful investor I suggest you tune out the financial experts as much as you can.

17 Responses to "The insanity of many financial expert predictions"

  1. Yep, it’s all a maddening, glorious, crazy game really. Bit like Pin the Tail on the Donkey when you think of it – keep reaching out, keep trying and sometimes you’ll get it right!

  2. They are just doing their job – trying to incite fear into investors so that we make trades to keep the machine running. I love reading all of the doomsday theories. I know that if any of them come to reality, my money won’t be worth anything anyways, so what’s the big deal if I lose it all?

    You need to do your best to ignore this noise and stay focused on your long-term plan and goals.

  3. Frankly I can’t really follow any Messiahs or Prophets (financial or otherwise) if they are still alive.

    I still have a link to the Garth Turner imploring folks to buy Nortel.

    I have predicted Interest Rates will be going up real soon now for about 6 years now, so I will eventually be right and then you can all follow me

  4. I’ve never been one to watch or read the financial news except for some of the headlines through Google Finance but I tune most of it out. I still manage to be an average investor at best though.

    There’s always somebody predicting it right out there and someone predicting it wrong and it’s almost impossible to know the difference.

  5. I would have to agree that financial news can be counterproductive. Many people give it, and make predictions, and so many of those predictions are contrasting to other “expert” opinions. You just can’t truly and accurately predict the markets without a bit of dumb luck.

  6. Yep, crazy talk. I remember reading some survey where 80% of CEOs admitted that it was completely impossible to predict the direction of the markets, yet 80% of them made a prediction with certainty anyway in the exact same survey. …That’s just sheer arrogance.


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