Think Twice When You Hear Predictions of a Market “Crash”

The “c” word (i.e. crash) is “awfully good at grabbing investor’s attention,” but there’s no way to know when it will arrive, according to a recent article in The Wall Street Journal. But that hasn’t stopped many from trying, the article notes, citing examples of some of history’s bold prognosticators: Roger Babson, who “pioneered the practice with his 1920s newsletter of making predictions that he claimed were based on Newtonian physics,” and whose “reputation and… Read More

Were Market Gurus Accurate about Recent Predictions?

At the start of 2019, BAM Alliance director of research Larry Swedroe outlined a list of predictions–made by various market experts and investors–to identify a consensus of “sure things” that he recently scored with “+1” for true, “-1” for false. Below is a chart outlining his findings: Prediction Score U.S. economic growth would continue strong -1 Corporate profit growth would continue strong -1 U.S. stock market would have a strong year +1 It would be… Read More

Morningstar’s Rekenthaler on Economic Predictions

A recent article by John Rekenthaler of Morningstar begins: “Economic predictions are wonderfully useful…after the fact.” He discusses hindsight bias, and how “history gives a simple picture of that which was once complex.” To illustrate his point, Rekenthaler shares the results of a Merrill Lynch survey of 200 institutional investment managers across the world on various items to gauge their views on the biggest “tail risk”—that is, the item most likely to have caused a… Read More

Siegel Says Rally Has Legs

The stock market boost fueled by the Trump victory will probably continue through December, says Wharton professor Jeremy Siegel in a recent interview with CNBC. “When you have all the small stocks, large stocks, even tech stocks—which we know have some challenges—joining with it, I don’t think this is something that ends tomorrow.” At the time of the interview, Siegel predicted that the Dow could reach 20,000 (it now stands at 19,300). Siegel says that… Read More

Dow Prediction is Getting Close

Back in 2012, when the Dow Jones Industrial Average was at 12500, Seth Masters of asset manager AllianceBernstein predicted that it would reach 20000 by the decade’s close. This according to Steven Russolillo in this month’s Wall Street Journal. Masters, who has a history of bold forecasts over his 26 years at the firm, told Russolillo that his prediction “hit a nerve” due to the pessimistic investor climate at the time–bonds had beaten stocks over… Read More