Some Economic Predictions for 2012

I routinely get asked for market predictions. Friends and colleagues ask questions like what will interest rates do this year? My attempts to say that I don’t know and that I don’t think anyone else knows either are usually met with something like “yes, but where do you think the stock market is headed?”

So, I decided to have some fun and give people the predictions they want. These predictions will be random. I didn’t toss any coins, but I’m just going to write down the first thing that comes to mind without any serious thought.

Random predictions for the next year:

1. Interest rates will go up a little.
2. Housing prices will come down a little.
3. Canadian and U.S. stock markets will have an above average year.
4. Bonds will have a below average year.
5. RIM won’t drop 75% again.
6. Berkshire Hathaway will have a strong year.

If you rely on these predictions, you’re crazy. If they prove to be uncannily accurate, I will refuse to take any credit.

Humans seem wired to believe that with enough thought we can somehow predict the future. To some extent we can. We know when the sun will come up each day, and we can predict tomorrow’s weather with some accuracy. However, financial markets already reflect a consensus of predictions. Trying to out-predict the world consensus view is largely futile.

Comments

  1. DillonJanuary 11, 2012 at 9:31 AM

    I predict that some of your random predictions will prove to be correct, and some will not.

    I am confident my prediction has at least a 50% chance of being correct.

    ReplyDelete
  2. David LetoJanuary 14, 2012 at 9:54 PM

    I predict that most predictions will prove to be wrong. But you can be sure to see positive economic growth.

    ReplyDelete

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