Free Market Advice: What Do You Believe?
Recently I came across an article in U.S. News & World Report from March 10, 2008, written by Kirk Shinkle. (At the gym, often there are only old magazines available). Shinkle asks Citigroup’s chief U.S. equity strategist, Tobias Levkovich, “So how are stocks going to do this year?” Levkovich predicted in March that markets will close up this year about 5 percent, which would be about 1550 on the S&P.
On Friday, the S&P closed at 876, down from 1468 last December 31. If anyone took his advice, you’d be down by 40%. The two sectors he advised investors to buy? Financials and consumer discretionary, which he said “these margins aren’t about to be destroyed.” Today those sectors have been decimated.
When I moved back to the Pacific Northwest in April, so many real estate agents advised me to buy soon because “pricing won’t get any better than now.” Year to date, nearly 9% of all licensed real estate agents in Washington have given up their licenses (according to official data from the State of WA). Today we rent and I feel lucky.
If the chief equity strategist of one of the nations most prestigious institutions cannot get it right, how could we? When professionals in the real estate industry get it wrong, how can we get it right? What free advice are you believing today? What publications and pundits are you reading today? Caveat Emptor!
Hey Kendall,
I was too young to remember any previous recessions, but I just wanted to make a note on how global the slowdown really is. Things have been slow over the past 9 months, but spending has seemed to deteriorate at a much faster rate over the past couple of months here in Viet Nam.
The growth estimate was scaled back for 2008 due to the local government pulling back the reins on lending. I wonder what 2009 will look like.
The only author on trends that has held up from my reading over the last two years is Nassim Nicholas Taleb, a former Wall Street “quant.” His book, The Black Swan, deals in detail about why the majority of what pundits predict ends up being wrong over time. I suppose I might start listening to a few pundits who let the world know that they were completely wrong too. None have surfaced on my radar, though I suppose they’re out there.
When all this started falling down around our ears, I had a nice discussion with my neighbor, a retired insurance salesman who fits the mold of the “Millionaire Next Door.” He’s set financially, but he drives used cars and looks like the rest of us. I listen to Rich because he’s prudent, decidedly not flashy, and continues to work hard.
What I can predict with certainty is that tomorrow, I’m going to wake up and go to work.