‘Tis the Season for Predictions

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‘Tis the Season for Predictions

Postby Rick Ferri » Thu Dec 13, 2012 10:20 am

Look out! December means one thing − predictions − lots of them, mostly bad. We’ll hear forecasts about interest rates, stock prices, commodities, gold, economic growth, and of course, a fresh batch of Doomsday predictions. You’ll hear the bad, the ugly and the worst in that order. There may be a few good predictions out there, but you won’t recognize them in all the noise.

Here's a blog on the lighter side about forecasting the future: Look Out! ‘Tis the Season for Predictions

Rick Ferri
Mutual fund investing is simple. There is risk, there is return, and there are costs. All else is marketing.
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Re: ‘Tis the Season for Predictions

Postby Levett » Thu Dec 13, 2012 10:26 am

In other words, we can safely predict there will be lots of noise, signifying nothing.

There's nothing new under the sun, as the good book says.

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Re: ‘Tis the Season for Predictions

Postby gotherelate » Thu Dec 13, 2012 2:03 pm

Rick, I'm with you on the December 21st thing. Fun article. Take care.
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Re: ‘Tis the Season for Predictions

Postby cheese_breath » Thu Dec 13, 2012 2:07 pm

I postponed doing my Christamas shopping until Dec 22. No sense spending all that money if the world ends anyway.
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Re: ‘Tis the Season for Predictions

Postby chaz » Thu Dec 13, 2012 2:27 pm

The Mayans ran out of space on their calendar, so we are safe.
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Boglehead Contest predictions ?

Postby Taylor Larimore » Thu Dec 13, 2012 2:30 pm

Hi Rick:

Nice article!

Many years ago I began a Boglehead Contest to forecast the S&P 500 Index one year in advance. It's purpose was to demonstrate how difficult it is to forecast the stock market. This year (2012) we had 396 Bogleheads register in January with December 31 forecasts ranging from 600 to 12,579. The S&P is currenty 1418.

Wall Street experts are no better. We have forecasts from 14. The best was J.P.Morgan whose forecast is currently behind 43 of our own Bogleheads.

Market forecasting and market-timing are usually fruitless. Bogleheads develop a long-term asset-allocation plan--then stay-the-course.

2012 BOGLEHEAD CONTEST

Note: Registration for the 2013 Boglehead Contest will be on this forum during the 1st ten days in January.

Best wishes.
Taylor
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Re: ‘Tis the Season for Predictions

Postby nisiprius » Thu Dec 13, 2012 3:00 pm

Here's a ten year prediction. I predict that over the next ten years, the Vanguard 500 index Fund, Fidelity Spartan Index Fund, Schwab S&P 500 Index, T. Rowe Price Equity Index 500 Fund, and the SPDR S&P 500 ETF will all
  • Come extremely close to meeting their stated investment objective, e.g. "The fund seeks to match the performance of the Standard & Poor's 500 Stock Index;"
  • Turn in total returns, annualized, within 0.3% of each other;
  • Turn in total returns, annualized, within 0.3% of the S&P 500 total return index;
  • And thus, will actually behave in practice just as they are supposed to behave in theory.
Remember, you read it here first.
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Re: ‘Tis the Season for Predictions

Postby sscritic » Thu Dec 13, 2012 3:00 pm

Probability 102 (second semester):

Throw 396 red darts at a dart board with a target. Throw 14 blue darts at the same board. What fraction of 396 will be closer than the closest of the 14?

Assume a 2 dimensional normal distribution with center at the target, zero correlation, and equal variances.

Hint: the square of the distance from the target is the sum of two normal squared, i.e., Chi-squared with 2 degrees of freedom.

Are bogleheads really better dart throwers than Wall Street experts?

P.S. I am too lazy and my next soap is about to start.
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Re: ‘Tis the Season for Predictions

Postby allsop » Thu Dec 13, 2012 3:18 pm

sscritic wrote:Probability 102 (second semester):

Throw 396 red darts at a dart board with a target. Throw 14 blue darts at the same board. What fraction of 396 will be closer than the closest of the 14?

Assume a 2 dimensional normal distribution with center at the target, zero correlation, and equal variances.

Hint: the square of the distance from the target is the sum of two normal squared, i.e., Chi-squared with 2 degrees of freedom.

Are bogleheads really better dart throwers than Wall Street experts?

P.S. I am too lazy and my next soap is about to start.


Your assumption that they hit the board instead of their feets is dubious, to put it mildy.
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Re: ‘Tis the Season for Predictions

Postby Clearly_Irrational » Fri Dec 14, 2012 3:07 pm

Rick Ferri wrote:Look out! December means one thing − predictions − lots of them, mostly bad. We’ll hear forecasts about interest rates, stock prices, commodities, gold, economic growth, and of course, a fresh batch of Doomsday predictions. You’ll hear the bad, the ugly and the worst in that order. There may be a few good predictions out there, but you won’t recognize them in all the noise.

Here's a blog on the lighter side about forecasting the future: Look Out! ‘Tis the Season for Predictions

Rick Ferri


Ok lets see:

Interest rates will remain low and probably go lower based on the Fed's current strategy.

2013Q1 stock prices may fall due to dividends being pulled forward but if the cliff is resolved we'll probably see some growth next year assuming no epic disasters occur like a breakup of the Euro. (which is unlikely in that time frame)

Food prices are going up, fuel prices should go down.

Economic growth will likely be slow but positive.

I don't have any short term doomsday predictions, but I will say that during the next 40 years capitalism is going to be stretched to the breaking point by the rising influence of robots and expert systems on the job market. I expect greater and greater wealth concentration at the top and even while total wealth grows enormously the average person is actually going to do worse. At some point that will lead to social unrest and could have all sorts of consequences.
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Re: ‘Tis the Season for Predictions

Postby EyeYield » Fri Dec 14, 2012 3:56 pm

Here's a prediction that I know will come true. The media will replace "fiscal cliff" with another scary catch phrase, which of course will lead to even more predictions, but I can't predict what the phrase will be.
"The stock market is a giant distraction from the business of investing." - Jack Bogle
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Re: Boglehead Contest predictions ?

Postby CoastieLifer » Thu Dec 20, 2012 1:48 am

Taylor Larimore wrote:
Many years ago I began a Boglehead Contest to forecast the S&P 500 Index one year in advance. It's purpose was to demonstrate how difficult it is to forecast the stock market. This year (2012) we had 396 Bogleheads register in January with December 31 forecasts ranging from 600 to 12,579. The S&P is currenty 1418.

2012 BOGLEHEAD CONTEST

Note: Registration for the 2013 Boglehead Contest will be on this forum during the 1st ten days in January.



If I were to follow simple registration instruction back in January, I would currently be in the top three :oops: ... Lucky in a not so lucky sort of way.
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Re: ‘Tis the Season for Predictions

Postby hazlitt777 » Thu Dec 20, 2012 2:18 am

My favorite line was, "There may be a few good predictions out there, but you won’t recognize them in all the noise."
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Re: ‘Tis the Season for Predictions

Postby Call_Me_Op » Thu Dec 20, 2012 8:53 am

hazlitt777 wrote:My favorite line was, "There may be a few good predictions out there, but you won’t recognize them in all the noise."


Doesn't that mean they are part of the noise? After all, some of the noise will turn-out to be right. Does that mean these were good predictions?
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Re: ‘Tis the Season for Predictions

Postby Valuethinker » Thu Dec 20, 2012 10:53 am

I predict the US economy will surprise us on the upside.

The negotiations in Washington could throw that off.
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Re: ‘Tis the Season for Predictions

Postby baw703916 » Thu Dec 20, 2012 11:09 am

Valuethinker wrote:I predict the US economy will surprise us on the upside.

The negotiations in Washington could throw that off.


Actually, I would say the converse. If the negotiations lead the conventional wisdom to be the expectation of fiscal Armaggedon, then an upside surprise may be more likely (because the bar is set so low).

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Re: Boglehead Contest predictions ?

Postby CABob » Thu Dec 20, 2012 6:20 pm

CoastieLifer wrote: If I were to follow simple registration instruction back in January, I would currently be in the top three :oops: ... Lucky in a not so lucky sort of way.

So you are saying that you had an accurate forcast, but, no one can verify it after the fact? :annoyed
Sounds like a lot of the professionals with their forcasts.
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Re: ‘Tis the Season for Predictions

Postby Noobvestor » Fri Dec 21, 2012 2:58 am

EyeYield wrote:Here's a prediction that I know will come true. The media will replace "fiscal cliff" with another scary catch phrase, which of course will lead to even more predictions, but I can't predict what the phrase will be.


See, the politicians will dither a bit, and we'll go off the cliff, and there won't be immediate resolution, but rational people will know a resolution will come, yet the media will need to keep up the drumbeat, therefore I predict the phrase: 'the fiscal canyon' that we have to forge across before climbing back up the other side, but have to wallow in for a while for the sake of ratings ;)
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Re: ‘Tis the Season for Predictions

Postby EyeYield » Fri Dec 21, 2012 1:37 pm

Noobvestor wrote:'the fiscal canyon' ;)

Ha! If that's the case, I can see the phrase being easily transferred across societal lines. Comedy: "Speaking of fiscal canyons, my ex wife called me last night".
"The stock market is a giant distraction from the business of investing." - Jack Bogle
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Re: ‘Tis the Season for Predictions

Postby Simplegift » Fri Dec 21, 2012 4:12 pm

Noobvestor wrote:...therefore I predict the phrase: 'the fiscal canyon' that we have to forge across before climbing back up the other side, but have to wallow in for a while for the sake of ratings...

If you'll accept "ravine," your prediction is already coming true, Noobvestor:

Will We Get Out of the Fiscal Ravine?
Fiscal Cliff Poses Tiny Dollar Gap, Wide Political Ravine
Cordially, Todd
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Re: ‘Tis the Season for Predictions

Postby hazlitt777 » Fri Dec 21, 2012 5:00 pm

Here are some predictions for gold and silver:

http://www.youtube.com/watch?v=ivjqsaSL ... ploademail
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Re: ‘Tis the Season for Predictions

Postby Phineas J. Whoopee » Sat Dec 22, 2012 4:05 pm

Regarding the stock market, it will fluctuate.

http://www.quotationspage.com/quote/21069.html

PJW
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Re: ‘Tis the Season for Predictions

Postby Beagler » Sat Dec 22, 2012 4:44 pm

Here is a list of 2012 predictions: http://money.cnn.com/gallery/pf/2012/12 ... index.html
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Re: ‘Tis the Season for Predictions

Postby stratton » Mon Dec 24, 2012 8:46 pm

Apple will have Rick Ferri manage their $100+ billion and he'll buy out DFA.

:moneybag

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Re: ‘Tis the Season for Predictions

Postby baw703916 » Mon Dec 24, 2012 8:52 pm

Since I used to live in upstate New York, I think "fiscal gorge" sounds more picturesque. It could even include a scenic waterfall.
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Re: ‘Tis the Season for Predictions

Postby spanky123 » Mon Dec 24, 2012 8:53 pm

Beagler wrote:Here is a list of 2012 predictions: http://money.cnn.com/gallery/pf/2012/12 ... index.html

How about 2013?
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Re: ‘Tis the Season for Predictions

Postby Hexdump » Tue Dec 25, 2012 9:16 am

Vanguard Wellesley fund will go in the tank since I am about to go "All in" into it. :D
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