The Prediction Game

images-39

If you want to look like a brilliant stock market analyst, keep predicting the same thing over and over again until it finally happens.

A great example of this marketing strategy is newsletter publisher Marc Faber, whose website modestly describes him as “an international investor known for his uncanny predictions of the stock market and futures markets around the world.”  He is also, in some circles, known as “Dr. Doom.”

On January 1 of this year, Faber predicted a weakening U.S. economy, and said that he expected U.S. stocks to fall in 2016.  Uncanny, right?  Except that in August of 2013, Faber was telling MarketWatch essentially the same thing, predicting a 1987-like stock market meltdown that could see the S&P 500 fall more than 20%.  (The index ended that year up 32.4%.)

In December 2013, Faber offered his predictions for 2014, saying that the market will decline in the coming year—and recommended that his investors buy gold instead.  (The S&P 500 was up 11.74% in 2014, while gold prices went down 2.19%.)

This is yet more evidence that we should tune out anyone who claims to have predicted the future with accuracy—as if we need another reason to ignore gypsies with crystal balls, soothsayers wearing wizard hats, palm readers and stock market pundits with sketchy track records.  Alas, these people tend to come out of the woodwork whenever markets go down, and they prey on our desire to know when the pain will be over.  They also tend to get more attention from the press than more honest analysts who refuse to play the prediction game and openly tell us they don’t know what will happen next.  The folks who have been predicting a market crash year after year deserve no credit for finally stumbling on an accurate forecast.

About the Author: Bob Veres has been a commentator, author and consultant in the financial services industry for more than 20 years.  Over his 20-year career in the financial services world, Mr. Veres has worked as editor of Financial Planning magazine; as a contributing editor to the Journal of Financial Planning; as a columnist and editor-at-large of Dow Jones Investment Advisor magazine; and as editor of Morningstar’s advisor web site: MorningstarAdvisor.com.

Mr. Veres has been named one of the most influential people in the financial planning profession by Investment Advisor magazine and Financial Planning magazine, was granted the NAPFA Special Achievement Award by the National Association of Personal Financial Advisors, and most recently the Heart of Financial Planning Distinguished Service Award from the Denver-based Financial Planning Association. 

Sources:

Marc Faber: The Same Sort of 1987 Crash Is Coming in 2013

Source: Photo by Spencer Platt/Getty ImagesIf you have spent much time watching financial market gurus and market pundits, you know all about Marc Faber. He has adequately predicted and warned of serious financial turmoil on a timely basis before, and now Faber is warning that a 1987-style stock market crash is coming again.

Marc Faber Predicts Recession in America in 2016 | Gold and Precious Metals

“Ten-year US Treasuries are quite attractive because of my outlook for a weakening economy,” Faber, the publisher of the Gloom, Boom & Doom Report, said in an interview with Bloomberg. “I believe that we’re already entering a recession in the United States” and US stocks will fall in 2016, he said.

Dr. Marc Faber’s three bold predictions for 2014

From Yahoo Finance: Dr. Marc Faber, publisher of The Gloom, Boom & Doom Report, has three very bold predictions for the upcoming year. He’s one of the world’s most noted market contrarians. Now Dr. Marc Faber, publisher of The Gloom, Boom & Doom … Continue reading →

Kindle

Leave a Reply