The Worst Stock Market Predictions Of All Time


If everyone could correctly predict the market, then investing in stocks becomes a useless endeavour. While we remember several famous investors for their correct predictions, even the best investors tend to make mistakes or inaccurate predictions. We take a look at some of the worst stock market predictions by competent and incompetent sources.

1. Warren Buffet

Fig.1: Warren Buffet (middle-left), and Charlie Munger (extreme right) (source:wikipedia)

At one point, one of the richest investors on the planet, Warren Buffet has made several successful and a few wrong investments over the past century. Buffet invested in Berkshire Hathaway in 1962, which was a textile company in a failing industry. The mistake was estimated to cost him $200 billion. Another mistake Buffet says was not buying Amazon because he didn’t think Bezos could succeed in scaling the company.

2. Irving Fisher on the great depression

Fig.2: Irving Fisher (right) with his son (left) (source: flickr.com)

Imagine predicting the markets are going to be higher in 1929? Irving Fisher did so. Irving Fisher published the theory of capital, investments, and interest rates in 1906. Fisher‘s theory of Interest is still taught in Economics and finance classes at Masters level. As smart as Fisher was, he also predicted that the market was going to be higher in the following weeks, right before the Great Depression in 1929. Fisher was off his mark with the Dow Jones crashing and not recovering to the same levels until 1951.

3. Jim Cramer on Bear Sterns and HP

Fig.3: Jim Kramer in Mad Money (source: Wikipedia)

Jim Cramer has made several bad calls which deserves an entire list of its own. Cramer advised investors to continue to hold Bear Sterns even when the company faced liquidity issues in 2008 during the financial crisis. The stock fell more than 92%. Cramer also advised his viewers on his show Mad Money to sell HP, and in the next 6 months, the stock doubled in value. Moral of the story: do the opposite of what Cramer tells you to do.

4. Analysts on Enron

Fig.4: Enron office (source: flickr.com)

At the time the Enron scandal came to light, 16 analysts on wall street had a buy ratings on the stock, while no one recommended anyone sell the stock. Over the course of the next one and a half years, Enron’s stock went from $90 a share to less than 7 cents a share. The Enron scandal was an accounting scandal involving the accounting firm Arthur Andersen. Arthur Anderson rebranded to Accenture, the company we know today.

5. Paul Krugman on the internet

Fig.5: Paul Krugman accepting the Nobel Prize (source: wikipedia)

Paul Krugman, a Nobel Prize winner, predicted the internet will follow Metcalfe’s law, and the internet will have no greater impact than the fax machine. As more people can talk to each other, they will have nothing to say. He predicted the end of the internet by 2005. Over that period, Amazon returned over 900% returns, Apple returned over 1700% returns, and other internet stocks returned over three digit percentage returns.

If you like this story, also check out 6 historic bubbles and crashes in the stock market.

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