Throughout history, there have been stories of great mythical oracles who could predict events. The Greeks had Pythia -- a high-priestess in the Temple of Apollo -- whose foresight was said to be infallible. In the Nordic countries, Odin was known to carry the severed head of Mimir, who gave him secret knowledge and counsel. Even in today's modern world, many still follow the advice of an "Oracle from Omaha."
But the fact is that nobody can predict with any amount of certainty what will happen in the future, especially when it comes to financial matters. That doesn't mean that many haven't tried -- more and more of them as the financial media has grown -- but more often than not, those who do end up with egg on their face.
Here then, in no particular order, are the 10 worst financial predictions of the last 25 years.
The 10 Worst Financial Predictions of the Last 25 Years
The 10 Worst Financial Predictions of the Last 25 Years
Bob Prechter is a Yale graduate and former Merrill Lynch analyst who successfully predicted the bull market of the early '80s and has been dead wrong ever since.
At the time the Dow Jones industrial average (^DJI) was at 9,686.48, and he warned that it would be likely to fall below 1,000 over the next five years. Well, he still has one more year to fall from 17,000 and be proven correct.
It's hard to look around today and imagine a world without smartphones and tablets. But in 1992, on the heels of the first industry event designed to promote mobile devices, one giant in the tech industry predicted that they would never become a reality.
The idea of a personal communicator in every pocket is a "pipe dream driven by greed," declared Andy Grove, then CEO of Intel (INTC). Though he was considered a pioneer in the semiconductor industry, his lack of faith in mobile ultimately caused Intel to miss out on what a contemporary -- John Sculley, the CEO of Apple (AAPL) -- called the "the mother of all markets."
In the frenzied years of the late '90s, the stock market and particularly the Nasdaq were on fire. It was not unusual for a stock to move 25, 50 or even 100 points in a day. Secretaries were quitting their jobs to day-trade for a living, and it looked like the market would never come down.
It was this market environment that produced the infamous 1999 book, "Dow 36,000" written by James Glassman and Kevin Hassett. Though it predicted that the Dow would reach 36,000 within a few years, less than six months later the market topped -- and the dot-com crash began.
Barbara Corcoran is known today as one of the savvy deal makers on the hit show "Shark Tank." But in 2005, known for her success in the high-end New York City real estate market, she was asked pointblank in a Businessweek interview if there was a bubble in the market. "Of course there is no bubble. I think we are just getting started," answered the unabashed housing bull. "Bidding and overbidding are the norm of the day. So it's going to take a lot to slow this market down. Even if it does -- which I don't see the signs of -- it will still slow down slowly. That's not what bubbles do."
Apparently her shark senses were not yet fully developed, because the housing market topped only a few months later -- and $16.4 trillion in household net worth was lost over the following four years.
In late August of 2008, respected banking analyst and frequent CNBC guest Dick Bove upgraded Lehman Brothers to a "buy" rating. And even as the ill-fated bank's fortunes began to fade during the next few weeks, Bove championed the company as "undervalued" and it's balance sheet as "misunderstood.
On Friday, Sept. 12, as federal regulators met with the CEOs of U.S. and International firms to discuss Lehman's fate, Bove once again went on CNBC to declare the the government "would not let Lehman fail." Three days later it did just that, prompting one of the largest bankruptcies in U.S. history.
Author, CNBC personality and self-proclaimed investing expert Jim Cramer may have made perhaps the worst prediction in the history of the stock market. In early October of 2008, after the stock market had already dropped almost 50 percent, Cramer went on "Today" and told investors, "whatever money you need for the next five years, please take it out of the stock market."
For the record, the stock market bottomed a mere three months later, marking what most experts believe was a generational low, and five years later was up over 100 percent from "Mr. Booyah's" ill-timed call.
Using a name like the "Gloom, Boom and Doom Report," it's hard to believe that anyone would take Marc Farber seriously. Yet the the Swiss native who holds a Ph.D in economics, gets plenty of attention by the financial media. Of course that doesn't mean his predictions are accurate.
In May of 2009 he told Bloomberg, "I am 100 percent sure the U.S. will go into hyperinflation." A few years later he doubled down, stating that the U.S. would experience Zimbabwe-like hyperinflation. For the record, hyperinflation is defined as the price of goods and services increasing 50 percent per month. We're still waiting on that.
In 2010, Meredith Whitney had two claims to fame: marrying a former WWE professional wrestler and predicting the 2008 financial crisis. However, not willing to let well-enough alone, she made a bold prediction in late December on "60 Minutes," claiming that within 12 months the U.S. would have "significant" municipal bond defaults and "hundreds of billions of dollars" in losses.
Four years later, with the exception of the $18 billion Detroit bankruptcy, her prediction still has not materialized.
It's bad enough to make one of the worst financial predictions of all-time, but when you do it twice, you must be something special -- and Dick Bove fits that bill. Not content to rest on his laurels for completely blowing the Lehman Brothers call, three years later he went for broke with a prediction about MF Global.
Just five days before MF Global declared bankruptcy, Bove took to the air to suggest that all was fine at the company and that a buyer would be announced any day. Things were not fine. No buyer materialized. The result: more than $1.6 billion in customer losses.
In 1997, while attending a technology conference, Michael Dell, founder of his eponymous company, was asked what he thought Steve Jobs, who had just returned to Apple, should do with the company. He responded, "What would I do? I'd shut it down and give the money back to shareholders."
Jobs, who was never one to mince words, reportedly responded to Dell's comments at an employee meeting by saying, "F*ck Michael Dell." Nine years later, when a surge in Apple's stock price pushed its market capitalization past Dell's, Jobs took a moment to come full circle with his employees in a memo that read "Team, it turned out that Michael Dell wasn't perfect at predicting the future. Based on today's stock market close, Apple is worth more than Dell. Stocks go up and down, and things may be different tomorrow, but I thought it was worth a moment of reflection today. Steve."