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Bill’s By The Number$

Posted by: Vanessa Guadiana | Posted on: January 12th, 2015 | 0 Comments

  1. WHAT THEY THOUGHT – At the end of 2013 (12/16/13), 10 Wall Street equity strategists forecasted the closing value of the S&P 500 as of 12/31/14.  The predictions ranged from a low of 1900 to a high of 2100, up from an actual 12/31/13 close of 1848.  The actual 12/31/14 closing value for the S&P 500 was 2059, equal to a +13.7% total return result.  Only 2 of the 10 strategists had year-end 2014 predictions of at least 2059.  The S&P 500 consists of 500 stocks chosen for market size, liquidity and industry group representation.  It is a market value weighted index with each stock’s weight in the index proportionate to its market value (source: Barron’s).
  2. NOT THAT CLOSE – The S&P 500 lost 3.5% (total return) in January 2014, its worst monthly performance during 2014.  On 1/31/14, CNBC regular Art Cashin of UBS said “we’ve gone for an awfully long time without a correction.  Bull markets tend to have a maximum life of 5 years.  We’re getting awfully close to that” (source: CNBC).
  3. WENT DOWN – A group of economists polled in early January 2014 produced a consensus forecast of 3.52% for the 10-year Treasury note yield as of 12/31/14.  The actual yield from 12/31/13 was 3.03%.  The actual yield as of 12/31/14 was 2.17%, a decline of 0.86% over the course of the year (source: Wall Street Journal).
  4. CONTRARIAN INDICATOR – 57% of individual stock investors were either “neutral” or “bearish” on the US stock market on 1/01/14 after the S&P 500 had just produced a +32.4% gain (total return) for 2013.  The S&P 500 then gained +13.7% during calendar year 2014 (source: American Association of Individual Investors).
  5. BOO-YAH – On 10/06/08 following a drop in the S&P 500 of 31% (total return) over the previous 12 months, CNBC personality Jim Cramer went on the NBC “Today” show and told investors, “whatever money you may need for the next 5 years, please take it out of the stock market right now, this week.”  The S&P 500 fell another 35% (total return) over the next 5 months, bottoming on 3/09/09, before beginning a 70-month bull run that has gained +242% (total return) through last Friday 1/09/15 (source: NBC).
  6. CROOK – During a 10/20/07 panel discussion, Bernie Madoff said “In today’s regulatory environment, it’s virtually impossible to violate rules.  It’s impossible for a violation to go undetected, certainly not for a considerable period of time.”  His Ponzi scheme was discovered on 12/11/08 (source: BTN Research).
  7. A LOT MORE THAN THAT – Forbes magazine wrote on 5/01/13 that “over the coming few years, look for oil prices to decline at least below $80 a barrel and quite possibly more.”  The price of oil was $91.03 a barrel on 5/01/13.  The price of oil closed at $48.20 a barrel on Friday 1/09/15 (source: Forbes).
  8. REALLY? – In early July 2010, market analyst Robert Prechter forecasted that the Dow Jones Industrial Average would fall below 1,000 within 6 years.  The Dow closed at 17,737 last Friday (1/09/15) (source: BTN Research).
  9. EXIT WHEN? – Fed Chairman Ben Bernanke wrote an op-ed on 7/21/09 titled “The Fed’s Exit Strategy” in which he discussed ending the 8-month old “Quantitative Easing # 1” (QE1).  Although Bernanke did not set an end date, few expected that QE would last until 10/31/14 or more than 5 years later (source: BTN Research).
  10. BORROWING – The April 2014 issue of Kiplinger’s predicted that the average 30-year fixed-rate mortgage (4.29% as of 4/30/14), would rise to “5% or 5.5%” by year-end.  The actual year-end rate was 3.87% (source: Kiplinger’s).
  11. NO COST – In March 2009, the CBO projected that the taxpayer cost of the August 2008 TARP bailout would be $356 billion.  On 12/20/14 the Treasury department announced an overall $15 billion TARP profit (source: TARP).
  12. TOO HIGH – The Department of Energy forecasted on 6/10/14 that the price of gasoline would average $3.48 a gallon in the 2nd half of 2014.  Gas prices actually moved from $3.67 to $2.26 a gallon over the 6 months, averaging $3.17 a gallon (source: Department of Energy).
  13. NOT EXACTLYOne month after the October 2013 16-day government shutdown, House Minority Leader Nancy Pelosi (D-CA) said “I think it’s probably even money now that Democrats will win control of the House in the November 2014 mid-term elections.”  Republicans controlled the House of Representatives 234-201 before the November 2014 elections and 247-188 after the elections (source: BusinessWeek).
  14. NOSTRADAMUS – Golf writer Gary Van Sickle predicted the week before the 2014 British Open that Rory McIlroy would win in rainy conditions and Sergio Garcia would win if sunny weather prevailed.  In the field of 156 golfers that started, McIlroy won and Garcia finished in a tie for 2nd just 2 shots back (source: Sports Illustrated).
  15. SUPER PREDICTION – Sports writer Peter King predicted on 9/02/14 that the Packers will beat the Colts by a touchdown in next month’s Super Bowl to be held in Glendale, AZ on 2/01/15 (source: Sports Illustrated).


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