In the Realm of Shill-dom and the Criminally Corrupt

I'd be the first to admit that I've made plenty of mistakes and bad predictions in my time. In most cases, I let ego or inexperience get in the way of good judgment, though sometimes it has been a matter of not having enough information.

Regardless, some of the forecasts highlighted by BusinessWeek in an article entitled "The Worst Predictions About 2008" reflect more than just bad decision-making. In my view, they are in the realm of shill-dom and the criminally corrupt. See if you can figure out which ones I'm referring to:

Just about everybody got wrong-footed by 2008, but some people's mistakes were truly spectacular

Here are some of the worst predictions that were made about 2008. Savor them—a crop like this doesn't come along every year.

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 (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 (FRE) and Fannie Mae (FNM) 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 (JPM) 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 (C) 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.

Comments

[Fu]

There's about 200 more that belong on that list. Hank "Banking System Fundamentally Sound" Paulson could fill out a list of 10 by himself easily.

[H Spencer]

Well, we have learned that we cant run our country on "what somebody thinks". Journalists are becomming a dime a dozen, and so are many bigwigs and their dire future predictions. Politicians are in the "sugarcoat/feelgood" business for themselves and their parties, and in the "I told you so" business for their opponents. The main goal of a senior leader or a senior politician is to become "more senior". Not be voted out. The goal of the journalist is to be "right once in a while, or enough to garner a little respect from some folks, thus keeping their livelehood. Everybody has an opinion, but nobody DOES anything productive. I have an opinion on it all, but my opinion is only correct if things work out the way I think they will.

[Rick]

Don't diss my man T. Boone--he said "by the end of the year", not "at the end of the year".

[Howard]

"I'd be the first to admit that I've made plenty of mistakes and bad predictions in my time. In most cases, I let ego or inexperience get in the way of good judgment, though sometimes it has been a matter of not having enough information."

To the list of faults above, I would have to add, "blind adherence to political dogma in the face of convincing evidence" to cover all bases. I've discovered that the most powerful weapon one can have is a good, complete understanding of an opponent's point of view. That way, you can effectively rebut those ideas that are wrong, understand the evidence for and against a thing - and just as importantly, change your opinion when you discover yourself wrong. That way, you keep yourself from whining about how everyone (except yourself, of course) is motivated by evil, you avoid blind allegiance to ideas that are wrong, and you do not make the fatal mistake of attempting to personalize the conflict of ideas.

How hollow is the reasoning of those who ignore critical thinking!