[cmyden]

I think the sooner we all admit a few things the better off we'll be...

1) We all have some sort of bias in our opinions.

2) Everyone's predictions/opinions are equally valid, whether it's a realtor, a Nobel prize winning economist, or an anonymous ranting blogger, because...

3) Markets cannot be predicted accurately, by anyone, period. It's a fallacy to look back and attribute skill to these predictions.

I believe it was in Malkiel's 'A Random Walk Down Wall Street' which gave a great example of how we often attribute skill to something we shouldn't have.

Imagine a room full of 1,000 people and ask them to flip a coin. If it's heads, they can stay, if it's tails, they have to leave.

After the first toss, approximately 500 will need to leave. 500 will remain. After the next toss, there will be 250 left. Then 125. Then 62. Then 31. Then 15. Then 7. Then 3.

Then finally, after about 8 or 9 coin tosses (or however many it takes), you will eventually just have one person left. This person managed to flip a coin and have it land on heads 9 times in a row, are they skilled? Statistically, one of those thousand in the room were bound to have this happen to them.

But before the coin tosses began, could you have predicted which one of these 1,000 people were going to come up heads 9 times in a row?

When someone comes along and makes a bold prediction that turns out to be correct, it's easy to look at that person after the fact and attribute it to skill, when in fact it's not.

Do a Google search for articles from 2005 before the U.S. housing market crash. You'll find well respected economists/analysts making predictions that range from soft landing to housing crash to stagnation.

cM