Economist warns about state of financial markets, but Wealth Professional speaks to experts who do not agree…
There was a stark warning from leading economist David Levy as part of his monthly The Levy Forecast – but it seems that advisors here in Canada aren’t listening.
Levy, who is the chairman of the Jerome Forecasting Centre LLC, has suggested that advisors should not pay attention to the bulk of analysts who are not predicting a US recession. He, by contrast, thinks that a US recession will happen, with a severe market recession in emerging markets too.
“The economic forces will be overwhelmingly stacked against stocks and other risky asset markets,” he said. However, he also believes that the US’s recession will pale into insignificance compared to other areas, commenting: “the developing American recession will still be serious, and the rest of the world is likely to be an unprecedented mess.”
Following his comments, Wealth Professional reached out to several advisors to garner their reaction. However, their responses suggest there is little weight to Levy’s words.
“Most forecasts, especially in the short-term, are no more accurate than random guesses,” said Nader Hamid, portfolio manager and director for HollisWealth.
“There are so many known and unknown variables in trying to forecast something it is literally impossible to come up with something conclusive. It is also well known and researched that forecasters do not have a track record better than 50/50. If we declare a recession is coming enough times we eventually will be right.”
Meanwhile, John DeGoey, portfolio manager at Burgeonvist-Bick Securities Ltd., believes that the predictions have almost no merit.
“Good investing has virtually nothing to do with forecasting,” he said. “As such, pretty much ALL predictions should be ignored.
“If these predictions do come to pass, it would be a challenge for advisors to explain why they didn’t see it coming. If 1,000,000 people claim to be able to predict winning lottery numbers and all of them play and one of them wins – has the winner demonstrated the validity of his/her prediction?”
Perhaps the most scathing words, however, came from Brad Jardine, of CIC Financial.
“Levy’s track record is average at best,” he said. “Economists get paid to ‘be in the news’, right or wrong doesn’t matter. If any economist’s predictions are so prescient, then they can invest accordingly.
“I suggest it would be interesting to compare an economist’s actual personal portfolio to what their daily, weekly or annual prognostications suggest to be a wise course of action. Implementation and discussion are two vastly different perspectives.
“We’re in the long term planning business and we’re here to help guide our client’s through the perpetual media haze of doom, gloom and noise. We also trust our business partners to be allocating and positioning to the best of their ability to provide long term growth and income with as little volatility as possible.
“So, this time, perhaps, in whole or part, this economist could be partially correct. Time will tell. In the long run, it doesn’t really matter.”
So after the advisors we spoke to slammed the economist’s predictions, we want to know how much attention – if any – you pay to these ‘expert’ opinions. Leave a comment below with your thoughts.
Levy, who is the chairman of the Jerome Forecasting Centre LLC, has suggested that advisors should not pay attention to the bulk of analysts who are not predicting a US recession. He, by contrast, thinks that a US recession will happen, with a severe market recession in emerging markets too.
“The economic forces will be overwhelmingly stacked against stocks and other risky asset markets,” he said. However, he also believes that the US’s recession will pale into insignificance compared to other areas, commenting: “the developing American recession will still be serious, and the rest of the world is likely to be an unprecedented mess.”
Following his comments, Wealth Professional reached out to several advisors to garner their reaction. However, their responses suggest there is little weight to Levy’s words.
“Most forecasts, especially in the short-term, are no more accurate than random guesses,” said Nader Hamid, portfolio manager and director for HollisWealth.
“There are so many known and unknown variables in trying to forecast something it is literally impossible to come up with something conclusive. It is also well known and researched that forecasters do not have a track record better than 50/50. If we declare a recession is coming enough times we eventually will be right.”
Meanwhile, John DeGoey, portfolio manager at Burgeonvist-Bick Securities Ltd., believes that the predictions have almost no merit.
“Good investing has virtually nothing to do with forecasting,” he said. “As such, pretty much ALL predictions should be ignored.
“If these predictions do come to pass, it would be a challenge for advisors to explain why they didn’t see it coming. If 1,000,000 people claim to be able to predict winning lottery numbers and all of them play and one of them wins – has the winner demonstrated the validity of his/her prediction?”
Perhaps the most scathing words, however, came from Brad Jardine, of CIC Financial.
“Levy’s track record is average at best,” he said. “Economists get paid to ‘be in the news’, right or wrong doesn’t matter. If any economist’s predictions are so prescient, then they can invest accordingly.
“I suggest it would be interesting to compare an economist’s actual personal portfolio to what their daily, weekly or annual prognostications suggest to be a wise course of action. Implementation and discussion are two vastly different perspectives.
“We’re in the long term planning business and we’re here to help guide our client’s through the perpetual media haze of doom, gloom and noise. We also trust our business partners to be allocating and positioning to the best of their ability to provide long term growth and income with as little volatility as possible.
“So, this time, perhaps, in whole or part, this economist could be partially correct. Time will tell. In the long run, it doesn’t really matter.”
So after the advisors we spoke to slammed the economist’s predictions, we want to know how much attention – if any – you pay to these ‘expert’ opinions. Leave a comment below with your thoughts.
