Some market predictions turn out to be right... don't they?
Remember, even a broken clock is right twice a day. Make enough predictions and eventually one will turn out to be right. The best thing to do is follow thoughtful research and ignore market predictions. The trick is knowing which is which. The articles and commentary below should help.
With an unprecedented degree of accuracy Jeremy Grantham predicted a decade of equity and bond returns in exact rank order. In August, 2008, in an article in The Economist, titled The Long And Short Of It, you can find this market prediction:
“More generally, Jeremy Grantham, GMO’s chairman, thinks that the equity bear market will continue for another couple of years, with the S&P 500 dropping by around 10-15% from here. But he warns that the chance of a meltdown—a drop well below fair value—has increased.”
The market did in fact go down as the quote above suggested. Then in March of 2009, Jeremy began recommending cautiously adding money back into equities. Does his past track record make his market predictions worth trading on? Not so fast. The truth is Jeremy Grantham studies data, thinks logically, has spent a lifetime working with financial markets, and I think he would be one of the first to tell you that no one can make consistently accurate stock market predictions. They may have all the data and trends right - and often they do - but that doesn't mean you can get the timing right and make profit-generating trades on that data.
In this August 2008 Fortune article titled 8 Who Saw The Crisis Coming And 8 Who Didn't, authors Katie Benner and Christopher Tkaczyk profile eight people, from bankers to traders to economists, who saw the crisis coming, and eight more, including Alan Greenspan, who didn't. They are all smart people. If you make enough predictions, over time you'll end up on the "got it right" list too, and then make some more market predictions and you'll end up on the "got it wrong" list. It is easy in hindsight to see who "got it right". It's not so easy to identify those same people in advance.