Stock Market Predictions Gone Bad

Just seven days before the stock market crash of 1929, economist Irving Fisher said, “stock prices have reached what looks like a permanently high plateau.” Over time, Fisher’s contribution to economics has been lauded, but his spectacular miss on the Great Depression dogs his legacy.*

Back in 1999, Charles W. Kadlec, then chief investment officer for old-line investment firm J.W. Seligman, said the Dow Jones Industrial Average would be 100,000 by 2020. With one month to go, he’s not wrong yet.**

From August 23, 2000 to December 31, 2001, Enron stock went from $90 to 6.2 cents. Yet, just a little more than two months prior, Lehman Brothers analyst Richard Gross said Enron was a strong buy, and ‘the stock should recover sharply.” This kind of call puts Lehman’s demise seven years later into perspective.

Whitney Tilson, when a partner at an asset management firm, advised investors against buying Google shares when it went public in 2004.*** Google’s return since its IPO based on the price at the end of November? More than 1,400%!****

Sometimes, the prognosticators get it right. Economist and NYU professor Nouriel Roubini said in a speech before the International Monetary Fund in September 2006, “ . . . my concern today is that the bursting of the housing bubble—we have not seen it yet—is going to lead to broader systemic banking problems.” *****

Sadly, it seems, there were few takers for Roubini’s prediction.

David R. Evanson is a financial journalist in Philadelphia.

* Anonymous, (2017). Irving Fisher. Policonomics. Retrieved November, 2019
** Carlozo, Lou, (August, 2017). 10 Worst Wall Street Opinions in History. GO Banking Rates. Retrieved November, 2019
*** Anonymous (2019). Whitney Tilson. LinkedIn. Retrieved November, 2019
**** Anonymous (2019). Google IPO Price. Google. Retrieved November, 2019
***** Cox, Jeff (July, 2014). Best and worst predictions of the past 25 years. CNBC. Retrieved November, 2019