“Man will not fly for 50 years.”
— Wilbur Wright, to brother Orville, two years before their first successful flight.
“There is no reason for any individual to have a computer in his home.”
— Ken Olsen, President, Digital Equipment, 1977
Predictions…we all make them. Some are famous for their boldness, like Joe Namath’s guarantee of a Super Bowl victory for the New York Jets in 1969. Others, like the two above, have been conveniently lost in history archives. However, those who make poor predictions usually don’t forget them, particularly when their lives are affected dramatically. I don’t know who Ken Olsen is and I hadn’t heard of this prediction until recently. One thing I do know: Ken Olsen, his family, and his former employees remember it well!
If you’ve ever listened to Wall Street analysts, economists, and politicians, you will have noticed something they would be quite hesitant to admit: they are often dead wrong in their stock market and economic predictions. History may forget their off-base predictions, but those who were negatively affected by them always remember.
By no means is this a new phenomenon. Here are a few examples from the Great Depression era:
“The end of the decline of the stock market will probably not be long, only a few more days at most.”
— Irving Fisher, Professor of Economics, Yale, Nov. 14, 1929
Check out the date above: Dr. Fisher, a highly respected economist, said this about 2-3 weeks after the Great Stock Market Crash in October of 1929. In case you completely slept through this section in your high school American history class, the stock market did not recover in a few days. It continued on for the next decade, right into World War II. In fact, a full recovery really didn’t occur until after World War II, and the Dow did not get back to its high mark of 1929 — back to even — until 1954. That’s not a typo. Dr. Fisher was about 25 years off in his prediction. Sorry investors!
“Gentlemen, you have come 60 days too late. The depression is over.”
Sorry, President Hoover — no matter how good your intentions and the backing of any financial “experts” you consulted, you were dead wrong! If you Google “Great Depression quotes,” you will find dozens of similar quotes during the decade of the 30s from all sorts of financial and political experts.
How could they be so wrong in their predictions? Weren’t they intelligent enough to see the real issues? Before I tackle that question, let’s look at some more recent quotes. I found an interesting article on Businessweek.com from December 20, 2007. Eight different stock market analysts gave their predictions for 2008. If you remember, the last half of 2007 was a rough period for the stock market. However, as is usually the case, most analysts and investors had high hopes for the coming year. Every analyst interviewed in this article was bullish to some degree. Here were the recommendations of one of them: stocks in general were “at a bargain,” specifically financial stocks. “Buy financial stocks” was his bottom-line advice. Ouch! Financial stocks were absolutely crushed in 2008, and many have still not recovered by the time of this writing.