The Lack of Accuracy of Forecasting Experts

There is an overwhelming body of evidence on the inability of forecasters to make accurate predictions. Take, for example, this last week in the equity markets. We saw a 400 point free fall followed by a 100 plus rally the following day. As I am writing this, the market is up all most 300 points! None of the so called forecasters I follow had any information on this action. As I have said before, no one can predict with any accuracy what the stock or the bond markets are going to do.

A year ago, Reuters’ news agency polled 16 money market dealers who do business directly with the Federal Reserve. One would think that these guys would have a pretty good handle on interest rates. Their consensus forecast was for the 10-year Treasury note yields to rise from 2.5 percent to 3.2percent by September 2011.

 This has been a very crazy year and it is not over yet. Volatility created a new paradigm whereby 300 to 400 point days have become the norm and many money managers are scrambling to adjust allocations to dampen the effects of a manic depressive market.

 In the end price will win.  Down days allow us to buy equities at drastically reduced prices. I will be doing a video on various market observations Nov. 14, so look for the email.


About billriley

Chief Executive Officer, Chief Compliance Officer A co-founder and shareholder, William Riley is a 33 year industry veteran, who observed, many years ago, that over time institutional investors typically outperform individual investors while accepting less risk. In his role as Chief Executive Officer, Bill works tirelessly to make the wealth management strategies used by the world’s wealthiest families and largest institutions available to our firm’s individual clients. Bill combines fundamental and technical analysis to minimize investment portfolio risk and maximize potential returns. He uses a variety of non-correlated asset classes, including alternative investments, to minimize portfolio volatility and seek absolute returns in down or flat markets. Finally, Bill believes in a comprehensive approach to wealth management that fully coordinates and seamlessly integrates portfolio management, risk management and asset protection, trust, estate, tax and charitable planning. Prior to co-founding Riley Wealth Management ,LLC, Bill held management positions at Merrill Lynch, UBS, Raymond James, Paine Webber and J.C. Bradford. Bill founded Fort Worth branches for Raymond James and J.C. Bradford. Prior to entering the financial services industry, Bill ran his families closely held businesses. Bill’s experience operating family businesses combined with his wealth management experience makes him uniquely qualified to advise entrepreneurs and business owners on a variety of matters including complex and sensitive issues relating to business succession. Bill’s degrees and designations included a Masters Degree in Business Administration (MBA), the Chartered Financial Consultant designation (ChFC), the Chartered Life Underwriter designation (CLU) and the Wealth Management Specialist designation (WMS). A Fort Worth native, Bill is a TCU alum and active in many civic and charitable organizations. Bill and his wife, Marsha, now reside in Colleyville, and they have four grown children and four grandchildren. When he is not working on portfolios or studying financial markets, Bill can be found on the golf courses of Ridglea Country Club.
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