I have just been reading some predictions made by various people over the years that have been, how shall I say this, less than 100% accurate. It would seem that seeing into the future is a power that humans don’t generally possess. If you desire proof, or perhaps need a laugh, I suggest that you enter “failed predictions” into your internet search engine and read through a few of the entries. Smart and/or famous people are not immune from making false predictions. Actually, I think it a worthwhile exercise to review failed predictions simply to gain perspective regarding the noise that permeates life in the 21st century.
So, I would take a moment of your time just now to point out that if you were to have polled economic prognosticators at the beginning of 2014 most would have predicted that holding bonds would be a mistake. Some were quite certain. After all, with interest rates at historic lows and with economic activity picking up, interest rates were bound to move up, and bond values (which move opposite to interest rate changes) were bound to fall. Nope. As of market close earlier today, December 29th, the Barclays Aggregate Bond Index has gained 5.85% (total return) since January 1st. That’s about twice the inflation rate. It’s also a greater total return than was provided by the Global Dow index, domestic small cap stocks, emerging market stocks, or gold.
Therefore, let the 2015 predictions begin. But beware, investment results can suffer if too much confidence is placed in predictions, and predictions are less than 100% accurate.
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