Pickens wasn’t the only person who got 2008 wrong. There were plenty of others.

When it comes down to it, anybody can make predictions. It’s not very hard. But it is hard to make ones that do what they purport to do: predict.

My advice is to take them with a grain of salt. If predicting the markets were so easy to do, most of Wall Street’s brightest fund managers wouldn’t have lost 40 percent or more last year.

I’ve made my share of predictions in the last couple of issues, “A Preview of 2009?” and “Six Predictions for 2009″.  So I decided to go back a year and look up my predictions at the end of 2007 – to see just how foolish my prognostications were. Here is what I said on December 31st, 2007…

“No, it’s not the overall returns that are most worrisome. It’s the economy. The problems that came to the forefront this year – housing, a credit crunch, weak dollar, slowing economic growth and a tired consumer – aren’t going to disappear with the New Year. In fact, some of those problems – like the credit crunch – will get much worse before they get better.”

And here is what I said the week before, on December 24th…

“If the financials won’t lend, all bets are off. The economy is doomed. The market will fall…
But the credit crud is just starting to gum up the works of the finance sector. It’s far too early to call off the crisis… or to say (or hope) the worst is over.

The fact is, the banks still don’t have any idea how to price their mortgage-backed securities. They’re not nearly through writing off billions and billions of dollars.  They’re still going to need more cash infusions as they transfer their off-book losses to their balance sheets.

And to further complicate things, the insurance companies who have been guaranteeing bonds are being downgraded. Next to get a rating downgrade will be the bonds themselves…

Plus, the global economy hasn’t been immune to credit problems of its own. The subprime slime is reaching far and wide.

The fact is, we’re not at the beginning of the end of the credit crisis. There’s no light at the end of the tunnel here. We’re simply at the beginning. And it’s a deep and convoluted banking mess that will take all of next year to unwind.

It won’t be a pretty process.”

As it turned out, I got lucky and pretty much hit the mark. I was a little easy on the economy though. While I was probably more pessimistic than about 99 percent of the other prognosticators, the economy (and banks) did even worse than I expected.

The crowd is saying that the economy will make a comeback in the second half of this year. And once again, I find myself far more pessimistic than the crowd.

I believe we’ll have to wait until 2010 for any comebacks.

Source: Not All Predictions Are Created Equal