Talking Head Predictions

[edsanville]

Hello,

I'm sure most of us have read countless financial articles, and watched countless talking heads make predictions about price movements on the various business news channels.  Most of those predictions are vague enough that they become essentially non-disprovable.  However, occasionally a talking head will make a verifiable, specific prediction.  Maybe you saw someone predict that gold will be below $1,000 by 2015, or that the S&P will break 2,000 before September 2014.  These are the types of predictions we can actually verify, and yet I don't know of any news source that actually spends time looking back at the specific predictions that were made, and checks if they were accurate at all.

So, perhaps we can create a thread here on the PP message board, where we post links to articles and videos with specific, verifiable predictions.  Then, later we can re-examine those predictions and see how wrong (or right), they actually turned out to be.

If I encounter any such prognostications, I will try to post a link here with the predicted date, for easy future verification.  Perhaps other people can also post what they find, as well.

-Ed

[Pointedstick]

I'm sure most of us have read countless financial articles, and watched countless talking heads make predictions about price movements on the various business news channels.

Can't speak for anyone else, but I actually have not. I find financial predictions to be so laughable that there just doesn't seem to be any reason to pay attention. It seems even sillier than the regular news to me.

[edsanville]

I'm sure most of us have read countless financial articles, and watched countless talking heads make predictions about price movements on the various business news channels.

Can't speak for anyone else, but I actually have not. I find financial predictions to be so laughable that there just doesn't seem to be any reason to pay attention. It seems even sillier than the regular news to me.

Actually, I don't go out of my way to read and watch these things.  I mostly do it out of boredom.  Yes, I also find financial predictions laughable, which is why I'm curious to see how badly most of them pan out.

[kka]

http://www.pundittracker.com/categories/view/finance

[goodasgold]

I take all of the talking heads with a grain of salt the size of Mount Everest (although some are more entertaining, as well as more plausible, than others.)

The best attitude toward the talking heads is expressed in an Arab proverb: "The dog barks, but the caravan moves on."

[edsanville]

http://www.pundittracker.com/categories/view/finance

Interesting site!  The first thing I saw when I clicked the link is that Jim Cramer gets a D, and Nouriel Roubini gets an F. 

[Roberto]

Porter Stansberry makes public every year-end a report card on every one of his writers' (including his own) predictions.  I haven't seen anyone else willing to do that, until I stumbled across the PP. 

Regarding the "gold as hedge only," that simply can't be true in the PP.  Would you risk 25% of the value of your car or home every year just to insure it?

[MediumTex]

For the most part, I treat market predictions as Keeping Up With the Kardashians-style entertainment for investors.

In both cases, the material is presented as being reality-based, but it's really just a set of made-up stories calculated to stimulate, titillate, and agitate.

With that said, I do occasionally come across people who are able to reliably predict the unknown, and such people should always be taken seriously.



For those who have read the 2012 PP book, you may recall the illustration with the fortune teller and the guy in the suit.  That was a good one.

[barrett]

Regarding the "gold as hedge only," that simply can't be true in the PP.  Would you risk 25% of the value of your car or home every year just to insure it?

When insuring your home or car, that theoretical 25% payment would be "an asset that went to zero" which I don't think anyone here would predict for gold. We don't know how low it could go but there will most likely always be some level of price support. Harry Brown said that gold was money that people would turn to when the world's #1 form of money (the US$) was under threat or perceived to be under threat. Just paraphrasing HB. In Currency Wars, Jim Rickards stated "Gold is not a commodity. Gold is not an investment. Gold is money par excellence."

Yet I agree that one reads on this forum quite frequently that one should "think of gold as merely an insurance policy." I guess I could see it as similar to life insurance in that you pay a certain amount on a regular basis ($ that is therefore unavailable to put into another asset) for the benefit of possibly getting a big payout/return at some point. Of course the main problem with my analogy is that one would presumably still be alive when the price of gold soars... like collecting on your life insurance policy when you are, to quote Miracle Max from The Princess Bride, "only mostly dead." Mostly dead is still partly alive. Kinda like how we would feel if gold was way down in the dumps.

Sorry if I am a raving goofball. The coffee is a bit strong this morning.

Also, reading Medium Tex' posts on Carnac the Magnificent and possible names of future sports teams has gotten me off the track of serious commentary (something that I know you all count on from me!).

[Roberto]

Why should we continue to expect people to turn to gold just because the US dollar is under threat?  No one can predict the future, right? China and Russia are already working out bilateral exchange agreements which circumvent the dollar, and there is no reason such arrangements shouldn't multiply around the world among nations who recognize Uncle Sam's growing insolvency problem.  Or is there?

[MediumTex]

Why should we continue to expect people to turn to gold just because the US dollar is under threat?  No one can predict the future, right? China and Russia are already working out bilateral exchange agreements which circumvent the dollar, and there is no reason such arrangements shouldn't multiply around the world among nations who recognize Uncle Sam's growing insolvency problem.  Or is there?

For an entity that is more or less at the top of the food chain, the only real insolvency happens when it runs out of guns, bullets or the will to shoot them at people who challenge it.

The United States government is far from insolvent when measured according to that standard.  It has little to fear from the domestic population, which rarely challenges (or even thinks about) the core assumptions on which U.S. foreign policy is based, and the U.S. military is obviously without peer on the battlefield so long as the U.S. political leadership doesn't act too stupidly for too long.

As long as the United States is willing and able to deploy overwhelming military force anywhere in the world on a few hours' notice, the dollar will be fine.

That's JMHO, of course. 

The case of Iraq is interesting and perhaps instructive.  The U.S. expelled Iraq from Kuwait in early 1991 and Iraq spent the next ten years firing on U.S. aircraft patrolling the no fly zone and basically being obnoxious.  Hussein was allowed to stay in power through all of that, even as he violated many terms of the cease fire agreement from the end of the 1991 war.  The only military retribution occurred more or less in conjunction with Clinton's need to get the news coverage off of his penis's extracurricular activities.  None of it was really serious and I think that was obvious to the whole world.

Then, in late 2000, Hussein announced that Iraq was going to stop conducting oil transactions in dollars. 

For those who have read about the 2003 Iraq war, you know that people in the Bush administration began hearing chatter about attacking Iraq almost from the moment 9/11 occurred.  Many of them were puzzled that the cross hairs were being placed on Iraq with no proof that Iraq was connected to 9/11.

What I think was going on was that from the moment Hussein made his petrodollar-related announcement in late 2000, the U.S. was looking for a pretext to take him out.  What he was trying to do was that disruptive.

In other words, you can go to war with your neighbor, attack your other neighbor, commit genocide against your own people and repeatedly take shots at U.S. military aircraft and stay in power, but the moment you start messing with the dollar, your days are numbered.  From Iraq's 2000 dollar-related announcement, it was about 30 months before the U.S. invaded Iraq, and 30 months after that Hussein was executed.

U.S. foreign policy is sort of like a candy bar that consists of a core of bland but ruthless self-interested pragmatism that is covered with a sweet but thin coating of freedom-oriented slogans and images. 

[Roberto]

I agree that  Iraq  was all about preserving the petrodollar system, and have heard that we similarly and suddenly lost patience with Ghaddafi of Libya when he started making noises to the same effect.  However, I don't think that Russia and China, along with the other economic interests would be so easily brought into submission.    The US simply no longer has the political will and financial firepower necessary to sustain its empire.  It won't be about military strength then;  in our lifetime (most of us),the mighty Soviet empire collapsed without a single shot being fired.
The naked emperor may silence a few individual challengers, but eventually the entire village will be laughing if he doesn't get dressed - and quickly.

[MediumTex]

I don't think that Russia and China, along with the other economic interests would be so easily brought into submission.

It's not a matter of bringing them into submission.  It's just a matter of keeping them in their respective pens.  That's not my desire, of course--it's just my observation about how it works.

The US simply no longer has the political will and financial firepower necessary to sustain its empire.

Are you sure?  The U.S. spends more on defense than the rest of the world combined.  I would say that's one hell of a political will.  As far as financial firepower, we're talking about the largest economy in the world.  Is that not enough financial firepower?

It won't be about military strength then;  in our lifetime (most of us),the mighty Soviet empire collapsed without a single shot being fired.

Zimbabwe collapsed; Somalia collapsed; Afghanistan collapsed.  You might say that the Soviet Union was reorganized to jettison some of its most stupid economic arrangements that simply didn't work.  The U.S., OTOH, has a very innovative and competitive economy that is the envy of the world.  To compare the Soviet Union's demise to a possible future collapse of the U.S. seems like a reach.  With that said, though, Dmitry Orlov has created a nice side business for himself making that very comparison for many years now.  I just don't see it.

The naked emperor may silence a few individual challengers, but eventually the entire village will be laughing if he doesn't get dressed - and quickly.

I have certainly heard that same story countless times, and I used to tell that same story myself.  I got so good at telling it that I could not only scare other people, I sometimes scared myself.

The thing is, though, time just has a way of passing, and existing arrangements that are not too unpleasant have a way of just continuing as well.  As many things as there are to complain about when it comes to the U.S., if you simply walk down the street in most working class and middle class American communities and just talk to people about what's important to them, for me it paints a pretty encouraging picture of the future--just regular hardworking people trying to build a better life for themselves and their families.

I can get myself all worked up about the latest speculative "empire in decline" narrative, or I can build my business and spend time with my family.  I've learned to focus on the things that are close to me and real as much as I can and leave the doomer porn for someone else.

It is kind of fun to get all worked up about the end perhaps being near, though.  I know.  I've done it.

[Roberto]

Tex, not to oversimplify, but I think that debt - like any addiction - is a many-headed and very patient monster.  I'm not saying that we couldn't turn things around, get back on the road toward constitutional government, and recover a solid national balance sheet.  I just don't see many signs of it happening yet.  It's really hard to campaign against "free stuff," and eventually that stuff will have to be paid for.  When it can't be paid for, some method of foreclosure or repossession is usually implemented.  Why would the United States be immune to these universal principles?

[AdamA]

It's really hard to campaign against "free stuff," and eventually that stuff will have to be paid for.  When it can't be paid for, some method of foreclosure or repossession is usually implemented.  Why would the United States be immune to these universal principles?

I don't think he's saying that it won't happen, just that he doesn't believe it will happen in the foreseeable future. 

Who's going to repo our stuff?