Barry Ritholtz writes on Bloomberg that the “compulsory” economic forecast at the end of one year and the beginning of the next one are a “pet peeve” of his. He cited Jon Kenneth Galbraith who said, “The only function of economic forecasting is to make astrology look respectable.” Ritholz discussed his favorite silly prognostications, and wasn’t afraid to name names.
The financial punditsphere almost unanimously believed bonds would crash and yields would skyrocket. The 10-year started 2014 with a 3% yield and ended it with a 2.15% yield. Michael Aronstein was “the talk of the industry” with his Mainstay Marketfield fund. However, he lost 12% by betting for inflation, when inflation did not overwhelm the economy. One of the most “off” calls was for a stock market crash. Chapman University Professor said the Dow would go to 5, 000 before it would see 20, 000. Well, who knows, but stocks rose 40% this year, and have been up years he repeats his bearish call.
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As revered as Peter Schiff is, he believed the Fed’s QE program would bring gold to $5, 000. Gold, however has given a dismal performance; it began at $1, 200, picked up its head to $1, 400 and finished 2014 at $1, 150. Almost no one foresaw the drop in the price of oil, so that isn’t a blameworthy mistake, but Gene Epstein got it almost right. The Barron’s cover story, “Here Comes $75 Oil” was prescient, and Epstein predicted oil prices would fall because of increased drilling.
Barry Ritholtz is an author, equities analyst and CIO of Ritholtz Wealth Management. He was named one of the 15 most important financial journalists by the Daily Beast. He studied at Yeshivah University and Benjamin Cardozo School of Law.