Bad Financial Predictions of 2008-(Be careful where you get your news.)
The average year-end 2008 prediction for the S&P 500 made by 9 Wall Street equity strategists on 1/02/08 was 1612, a forecast that called for a gain of +10% for the year. Instead, the S&P 500 finished 2008 at 903, down 37% on a total return basis (source: USA Today).
Russian oil executive Alexei Miller predicted in June 2008 that the price of oil would reach $250 a barrel in 2009. Oil closed last Friday at $40.83 a barrel (source: Financial Times).
In a 5/17/07 speech in Chicago, Fed Chairman Ben Bernanke said that Federal Reserve officials "believe the effect of the troubles in the subprime sector on the broader housing market will likely be limited, and we do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system" (source: Federal Reserve).
At a symposium in Jackson Hole, WY on 8/31/07, Fed Chairman Ben Bernanke said that "it is not the responsibility of the Federal Reserve – nor would it be appropriate – to protect lenders and investors from the consequences of their financial decisions" (source: Federal Reserve).
A survey of 112 US money managers released on 11/05/07 predicted the outcome of the November 2008 presidential election. 61% of the managers believed Hillary Clinton would win the White House. Taking 2nd place in the poll was Rudy Giuliani with 15% of the vote (source: Barron’s).
In a 5/16/08 speech in Washington, Treasury Secretary Henry Paulson said "we are closer to the end of the market turmoil than the beginning. Looking forward, I expect the financial markets will be driven less by the recent turmoil and more by the recovery of the housing sector" (source: Treasury Department).
An article questioning Bernie Madoff’s investment strategy (titled "Don’t Ask, Don’t Tell") appeared in print on 5/07/01, 7 ½ years before his Ponzi scheme was discovered. When asked about the investment policy that he utilized, Madoff replied "it’s a proprietary strategy and I can’t go into it in great detail" (source: Barron’s).
So who are the real experts if our experts seem to know no better than the next guy? I would like to ask my readers to make some predictions on the comments of this post and in a year we will see how many were accurate. And don't worry about being wrong...taxpayers pay big salaries to guys that are wrong apparently a lot.