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Mark Sutcliffe GUEST BLOGGER

What do you do when the experts are wrong?

December 21, 2016 - 0 comments

If you rely on experts who claim to be able to accurately forecast future market performance, here are some important questions: how many chances do you give them and which of their predictions do you act on?  

Here's a story about Harry Dent, an economist and founder of an investment firm who has written 11 books.

One of those books, The Great Depression Ahead, was published in 2009 and was a New York Times bestseller. He has developed a specific investing thesis, called spending wave theory, that has its own Wikipedia page.

Dent has been predicting a huge decline in the market for years. In 2011, he said American markets would drop by 50%. In 2013, he predicted an 18-month-long market crash. Neither of those events happened, but as recently as December 10, he said the markets would drop by 17,000 points.

"I think (the Dow) is going to end up between 3,000 and 5,000 a couple of years from now," Dent told CNBC. "I think this is going to be a stock market peak of a lifetime followed by a crash very similar to the early 1930s. This happens once in a lifetime."

Now, barely a week later, Dent is saying he's bullish on the market. There's no point going into the explanation for his change of heart. But he's now saying the Dow will raise to 21,500 by the middle of next year.

So which prediction should you believe? And what if you'd acted on the previous one, only to find out he's changed his mind? More importantly, why is anything he says worth covering by the financial media.

By: Mark Sutcliffe with 0 comments.
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