The theme this week on the Retirement Quick Tips Podcast is: Stupid Stock Market Predictions

Today’s stupid prediction is from Harry Dent and his book The Great Crash ahead. 

A lot was wrong with Harry’s book, but much of it made sense at the time based on what was happening in the world. 

“To Harry Dent, the injection of over $800 billion in stimulus funds into the economy represented so much debt and uncertainty that a market crash was inevitable.”

There was an article about this over at wealth management.com. The article says: “Few authors have been so bold in their predictions. Dent predicted that the Dow, hovering around 11,000 for most of 2011, would fall by three orders of magnitude by 2013 to between 3,000 and 3,800. Few predictions survive the collision with reality. In 2013, the Dow was up 26.5% to an average closing price of 15,009. Dent also forecast a deflation in prices and the bursting of the bubble in China. Both forecasts also turned out to be without merit.”

There are a couple of lessons that I take away from a prediction like this. First, I would never recommend reading a book like this. There are always ways to weave a story together into a prediction that makes sense. So let’s assume you read the book and believe it to be a fair and accurate prediction of what’s likely going to happen in the future?  If you took the advice, and sold your stock portfolio, you would have missed one of the best 10 years for stocks ever. 

The 2nd takeaway is this: Never take bold action on a doom and gloom scenario. I hear all kinds of good reasons why the stock market, our economy, our society, and our democracy will collapse. Some of these theories make a lot of sense and are backed by smart people who know what they’re talking about. But they can’t see the future, and the world has an interesting way of throwing curveballs.

In order to be a successful investor, you have to stick with quality investments over the long-haul and not throw in the towel on your investment portfolio or your financial plan. It’s a recipe for disaster every time, and it requires that you have faith and hope in the future and make prudent decisions.

That’s it for today. Thanks for listening! My name is Ashley Micciche and this is the Retirement Quick Tips podcast. 

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