Gold: Before all the gold bugs migrated to Bitcoin, the precious metal was where they went to make their bad forecasts. Peter Schiff has been forecasting gold at $5,000 an ounce since at least 2010, based on his prediction of a huge surge in inflation. (It now trades at about $1,238.) Neither occurred. Jim Rickards, former general counsel at Long-Term Capital Management, came up with a $10,000 price target. To be fair, he said the same thing would happen by the end of 2017. Jim Rogers one-upped everybody, declaring in August that “Gold could turn into a bubble.” It hasn’t. But the sun still has another 5 billion years of hydrogen left, so perhaps it might.
Markets: Stock forecasts typically come from strategists at bigger firms, covering a modest range from a little too bullish to a little too bearish. Career risk tends to keep equity strategists more circumspect than the Bitcoin and gold crowd. Typically, these forecasts are for continued gains or solid growth, or softness and modest corrections -- but that’s before we get to the outliers.
My favorite cranks are way outside that broad range. There are too many to note, but perhaps the most notable offender is former Reagan White House Budget Director David Stockman. He has been more than perennially bearish -- he predicted a market crash in 2012, 2013, 2014, 2015, 2016, 2017, 2018 and 2019. Good rule of thumb: if you make the same call very year, even if it eventually comes true, you get no credit for it.Even the official guardians of the economy – central banks – do little better.
My advice when you see a forecast: Mark it down on a calendar or reminder program (I use the app Followupthen.com), then come back to it a year later. This lets you review how good or bad it was. It’s a great exercise in accountability.
Most of the time, the results reveal why spending too much time either paying attention to -- or making -- forecasts is mostly wasted effort.
This column was provided by Bloomberg News.