As my readers can imagine, I am extremely cynical about forecasts by experts. In every major investment mania there is a large number of academics and ―experts who will justify and fuel the increase in prices by writing papers about the merits of the inflating asset class.
I have experienced the implosion of high quality growth stocks in 1973/74 (for growth you can pay any price), the demise of the Japanese stock market after 1989 (then the most popular stock market in the world), the Asian crisis in 1997 (among investment strategists- Asia was at the time- the most favored investment destination), the collapse of the NASDAQ after March 2000 (then the darling of the investment community) and the housing slump after 2006 (remember, home prices never decline!).
In fact, history is littered with poor forecasts by experts and people in the know: In 1876, a Western Union internal memorandum stated that this "telephone" has too many shortcomings to be seriously considered as a means of communication. The device is inherently of no value to us.
In 1895, Lord Kelvin President of the Royal Society, opined that heavier than air flying machines are impossible. Before the First World War, Marshall Foche thought that "airplanes are interesting toys but of no military value."
An associate of David Sarnoff (RCA) said in the 1920s that "the wireless music box (radio)" has no imaginable commercial value. Who would pay for a message sent to nobody in particular?
Harry Warner exclaimed in 1927, "who the hell wants to hear actors talk?" In 1943, IBM President Thomas Watson‘s view was that "there is a world market for maybe five computers" and as late as 1977, Ken Olson- the founder of mini-computer leader Digital Equipment, opined that "there is no reason for any individuals to have a computer in their homes."
My advice is "Listen to Expert". Simply because you can learn a lot from their deep knowledge about an industry, a region, a company or any field in which they specialize. Do listen to them even if you completely disagree with their views. However, beware of their predictions and forecasts because by specializing in one field, “experts” may overlook exogenous factors, which may influence the outcome of future events and trends. - in GBD, June 2011
Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.
