Jul 11, 2011
What are the Experts saying?
What are the Experts Saying? – Kevin Brosious, MBA, CPA/PFS, CFP Wealth Management 1 Kevin is also a member of the Alpha Cares team of professionals at the Alpha Center for Divorce Mediation.
I often hear from prospective clients that they used to follow the advice of certain financial experts. Some paid for subscriptions to their newsletters, blogs and websites. A few told me that they never missed certain financial shows on TV. They would ask me what I thought of the person they followed.
Most times I would tell them that their financial expert was a “real smart” person but I would also tell them that there are a lot of other “real smart” people providing investment advice. However, none of these experts are all knowing all the time. One thing that all investors have to keep in mind is that there are two sides to every trade. When someone is buying, someone else is selling and vice versa. Often the buyer and seller are both “real smart” people but both can’t be right.
Just watch the financial news channel, CNBC, any day of the week. They often interview “real smart” people with differing opinions. They introduce these people as Our Panel of Experts. But the panel of experts often disagree. Here are a couple of predictions by experts that I consider “real smart” people:
Fed Chairman: “I expect there will be some failures….I don’t anticipate any serious problems of that sort among the large international active banks.” – February 28, 2008
* In September, 2008, Washington Mutual failed. Citi was rescued in November, Bank of America was given $20B on January, 2009.
Jim Kramer, Mad Money: “Bear Stearns is fine; don’t move your money from Bear. Bear Stearns is not in trouble, don’t do anything
silly.” – March, 2008
* Six days later, Bear Stearns is bailed out and share price plunges to $2.
T. Boone Pickens, legendary oil and gas executive: “I think you’ll see $150 a barrel (of oil) by the end of the year.” – June, 2008
* At the end of December, 2008, oil was trading at $40/barrel
Richard Band, editor, Profitable Investing Newsletter: “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!” – March, 2008. Band describes himself as the world’s #1 authority on investing for low-risk growth.
* At the time of his prediction, the Dow Jones Industrial Average (DJIA) was at 12,300. By late December it was at 8,500.
And my favorite has to be Harry Dent, Harvard MBA, and founder of HS Dent Investment Management and author. In 1998 Dent authored a book titled, “The Roaring 2000’s” in which he predicted a DJIA of 21,500 and potentially 35,000. The DJIA is currently struggling to stay above 12,000. Proving his ability to change with the times, in 2009, he authored a book titled, “The Great Depression Ahead”, in which he predicted a DJIA of 3800 by the end of 2010. The DJIA closed 2010 at 11,578.
Years ago, I made the decision to follow a passive investment strategy for my clients. Consequently, I never try to time the market or pick the hottest stock or sector. I came to this decision after years of listening to the experts.