I’ve posted Entry #46 to my weekly Beyond Buy-and-Hold column at the Out of Your Rut site. It’s called Predicting Stock Returns for Fun and Profit.
Juicy Excerpt: The reason why I take a different view about long-term stock prices (the prices that will apply 10 years from now) is that predicting long-term stock prices calls for the use of an entirely different sort of skill. I’ve been predicting long-term stock prices since 1996 and I’ve never gotten one wrong yet. Historical stock-return data is available on the internet going back to 1870. I’ve made year-by-year predictions from 1870 forward and, again, I’ve never gotten one wrong. You could do the same if you cared to. It’s not even a little bit difficult.
Long-term stock prices are not determined by unpredictable day-to-day events. They are determined by mathematics. Numbers are highly predictable. You can check them over and over and over again and they always turn out the same. I am more of a words guy than a numbers guy. But this is one quality of numbers that I greatly appreciate. Numbers, calculated properly, do not surprise us. Numbers are predictable.
Say that instead of asking you to predict who will win the Republican presidential nomination I asked you to predict whether the casinos in Atlantic City will turn a profit on their slot machines next year. Do you think you could offer a prediction with a good chance of coming through for you?