5 Worst Predictions of 2008
Sometimes investors and analysts make market predictions that are wrong, but then there are those instances where they are so far off that you have to classify them in their own “worst of” category. This post highlights just that.
The five worst predictions of 2008.
1. “A very powerful and durable rally is in the works. But it may need another couple of days to lift off. Hold the fort and keep the faith!” — Richard Band, editor, Profitable Investing Letter, Mar. 27, 2008
At the time of the prediction, the Dow Jones industrial average was at 12,300. By late December it was at 8,500.
2. AIG, “could have huge gains in the second quarter.” — Bijan Moazami, analyst, Friedman, Billings, Ramsey, May 9, 2008
AIG wound up losing $5 billion in that quarter and $25 billion in the next. It was taken over in September by the U.S. government, which will spend or lend $150 billion to keep it afloat.
3. “I think this is a case where Freddie Mac (FRE) and Fannie Mae (FNM) are fundamentally sound. They’re not in danger of going under I think they are in good shape going forward.” – Barney Frank (D-Mass.), House Financial Services Committee chairman, July 14, 2008
Two months later, the government forced the mortgage giants into conservatorships and pledged to invest up to $100 billion in each.
4. “No! No! No! Bear Stearns is not in trouble.” – Jim Cramer, CNBC commentator, Mar. 11, 2008
Five days later, JPMorgan Chase (JPM) took over Bear Stearns with government help, nearly wiping out shareholders.
5. “In today’s regulatory environment, it’s virtually impossible to violate rules.” — Bernard Madoff, money manager, Oct. 20, 2007
About a year later, Madoff — who once headed the Nasdaq Stock Market — told investigators he had cost his investors $50 billion in an alleged Ponzi scheme. (Further Reading: The Bernard Madoff Victims List)
View all ten in their original order at Yahoo Finance.
Looking back we still chuckle as we recall some of these historic calls. This whole year all major analysts predicted a soft fall and preached to not worry about the market unless of course you were Peter Schiff, but that’s besides the point.
I sit in a roiled state knowing that these investors simply fabricated false realities in their own minds by abating the hard facts, or maybe they actually believed it themselves. The real truth is that 2008 is set to finish as possibly the worst year ever in our history, surpassing even the great depression.
Perhaps new leadership lead by Barack Obama can pull us out of this calamtiy. With a fresh approval rating of 76% the words will still be echoing in every American’s mind as he gives his Inaugaration speech on January 22nd, 2009. “Yes, we can.”
Source:
The Worst Predictions About 2008
Peter Coy
Business Week, December 29th, 2008
