As we get ready to say goodbye to 2008 and ring in the new year, I will avoid the temptation to make any predictions—at least not in print for the entire world to criticize in hindsight.
A case in point. Here are some of the worst predictions that were made about 2008. These were all events that affected each of us financially, personally and politically. You just can’t make this stuff up.
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 and Fannie Mae 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. "The market is in the process of correcting itself." -- President George W. Bush, in a Mar. 14, 2008 speech
(For the rest of the year, the market kept correcting and correcting and correcting).
5. "No! No! No! Bear Stearns is not in trouble." -- Jim Cramer, CNBC commentator, Mar. 11, 2008
(Five days later, JPMorgan Chase took over Bear Stearns with government help, nearly wiping out shareholders.)
6. "Existing-Home Sales to Trend Up in 2008" -- Headline of a National Association of Realtors press release, Dec. 9, 2007
(On Dec. 23, 2008, the group said November sales were running at an annual rate of 4.5 million -- down 11% from a year earlier -- in the worst housing slump since the Depression.)
7. "I think you'll see (oil prices at) $150 a barrel by the end of the year" -- T. Boone Pickens, June 20, 2008
(Oil was then around $135 a barrel. By late December it was below $40.)
8. "I expect there will be some failures. I don't anticipate any serious problems of that sort among the large internationally active banks that make up a very substantial part of our banking system." -- Ben Bernanke, Federal Reserve chairman, Feb. 28, 2008
(In September, Washington Mutual became the largest financial institution in U.S. history to fail. Citigroup needed an even bigger rescue in November.)
9. "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.)
10. A Bound Man: Why We Are Excited About Obama and Why He Can't Win, the title of a book by conservative commentator Shelby Steele, published on Dec. 4, 2007.
(Mr. Steele, meet President-elect Barack Obama.)
Sometimes as bank marketers we have to go against the grain even when conventional wisdom, from pundits both inside and outside the bank, is telling us otherwise. We have to continually balance the market realities in which we operate against the validity of the information we are receiving.
As I contemplate 2009, the only prediction that I can safely make is that I’m sure that I will have plenty of grist for this year-end blog next December.
A happy, healthy and prosperous New Year to all!
Cheers,
Nick Vaglio, CFMP
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