analysts

Jeremy Grantham Predictions Reviewed

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Jeremy Grantham Predictions Reviewed 1

Updated 2/20/24 One year almost to the day, here we are with Jeremey Grantham predicting… wait for it… a bubble! Of course, a bubble. I guess we can call him a permabear now. He must not believe everything he says because his fund is still in business. Maybe he just says these things to get headlines. It works. Updated 02/01/2023 According to a Marketwatch article, “Man credited with calling the 2008 crisis says the next 20 years in the stock market will ‘break a lot of hearts.” Whew. That’s a lot to unpack. Take a closer look at Jeremy Grantham predictions. Let’s start with a 20-year call being virtually worthless. In the next 20 years, I too predict the stock market will have rough periods. I also predict growth, a big year, a terrible year, a sidewise year, and a general overall trend up fueled at some points by growth, and some points by inflation. I mean, seriously, pretty much everything will happen at least once during the next 20 years. Was The Prediction Really That Great? As I pointed out in an earlier article, there is a staggering amount of back-patting, and “See I was right!” when it comes …

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Jeremy Grantham Calls “Epic Bubble”

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stock market bubble

One of my favorite themes here on Finance Gourmet is accountability. Accountability for your financial advisor, accountability for talking heads on money TV, accountability for analysts making “calls” about the market. Too often, all of these predictions and calls are simply forgotten until one of them is “right” and then, they won’t shut up about it. I try, in my huge amounts of spare time (Hah!) to bring a little bit of accountability to the big names and headlines that fly by. Today, it’s Jeremy Grantham. Epic Bubble Every article with the name Jeremy Grantham in it makes sure to “credit” him with predicting the housing bubble of 2007. Some also credit him with predicting the dot-com bubble of 2009. That’s pretty cool, but it is now 2021. Wondering about the TurboTax card? What has he predicted in the last 11 years? Have any of those predictions been good … or bad? Never mind that, the finance press says. He predicted those two things over a decade ago and now he says, “Epic bubble!” Print it! Jeremy Grantham Track Record First off, let’s give Mr. Grantham some credit. In January 2018, he predicted a “melt-up” in the stock market. He …

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Stock Trends Reversing to the Mean

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stock market revert to mean

Nothing makes a financial journalist salivate more than the sweet sound of statistics to make their stock market warning article sound more legitimate. Of course, numerous statistics are meaningless, others are easily cherry-picked based on data, and still others are far less useful or predictive than other statistics that might not say the same thing. Today’s fun example comes courtesy of MarketWatch and the gloomy warning that U.S. Stocks could be in for a world of hurt if this trend reverses to the mean. Check out my Rakuten rebates review. “World of hurt?” – Whew! Pulling hard on our masculine headline click bait phrase dictionary this morning are we? What Is Reversing to the Mean? Reverting to the mean is the statistical probability that for any observation away from the mean, the more likely the next observation will be closer to the mean. An easy way to think of this is if the mean speed of cars passing by on a road is 55 mph, and one goes by at 95 mph, statistically the next card that goes by will do so at a speed closer to the mean than 95 mph, that is 94 mph or less. Obviously, this …

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Everyone Who Called a Downturn in the First Half of 2019 Is Officially WRONG

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stock market predictions 2019

It is now October. That is the third quarter of 2019. By any, and all, definitions the first half of 2019 is officially over. That means all of those analysts, pundits, economists, and big Wall Street talking heads who predicted a recession or stock market downturn in the first half of 2019 are officially wrong. They were also wrong about the first three-quarters of 2019, but that headline isn’t as catchy. 🙂 There is nothing wrong with that on the surface. Predictions of any kind are risky business. However, a great many of these same people trade on a weird blindness in the financial industry. No one keeps any real track of these predictions. As a result, if these same people go out and make the exact same prediction for next year, they get full credit in the media for “calling” the next downturn without any acknowledgement that they were wrong this year (and maybe several of the previous years.) Investing By Predictions is Dumb Past performance is not an indicator of future results. This statement is mandated to show up on all kinds of investing materials by regulators. It is a hopeless cry to the masses to not invest …

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Wrong Stock Market Predictions

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Wrong Stock Market Predictions 2

I read a lot of finance stuff. Most of the time, it’s a lot of the usual advice and tips wrapped up in new clothing. Finance and investing don’t really change that much. The exception is taxes, which change at least a little bit every year due to new tax court decisions, and the adjustments made to many tax numbers automatically each year due inflation. I keep reading about finance and investing both to keep my skills and knowledge sharp, and unfortunately, also to have some knowledge of whatever the latest finance and investing fads are. Investing for the long-term with a well diversified portfolio is the “eat less calories, burn more calories,” of finance. Everything else is a gimmick to achieve the same, while making is sound better (and easier). Tony Robbins Merchants of Doom I’m currently reading Tony Robbins’ Unshakeable. I like Robbins’ finance books. They repeat a lot of the sound financial advice that has been around for a while, often with a little more flair, and a lot more Tony. That is, Tony likes to name drop, which is fine, because he interviews some of the great minds for his books, but it’s always funny just …

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Meredith Whitney Muni Bond Defaults Fails to Materialize

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Remember Meredith Whitney? Right about now, she’s probably hoping you forgot. Whitney is the analyst who said, “There’s not a doubt in my mind that you will see a spate of municipal bond defaults…” She went on to say that there could be 50 to 100 sizable defaults or more and that those defaults would amount to hundreds billions of dollars worth of defaults. Municipal bond markets reacted by bidding up the yield for muni bonds. Most experts didn’t buy Whitney’s prediction. Even I wrote a 2011 article about how safe are muni bonds when people kept asking me about it. Of course, none of those stories was a big, inflammatory prediction of doom from a “name-brand” financial analyst. Analyst Predicts Muni Bond Defaults Wall Street and the financial markets are a very weird place. Preeminent analysts are created by making market calls or predictions that come to pass, especially when they make calls that no one else saw coming. Ironically, those same analysts aren’t necessarily held accountable when they make bad calls. Goldman Sachs’ Abbey Joseph Cohen made a name for herself by making ever higher market calls during the technology fueled stock market bubble of the late nineties. …

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