Every year about this time you start seeing supposed "experts" all over the news predicting where stocks, oil, and housing prices are headed. But do the high-priced pros really know any more than you do? We've got the answer on tape, and it might surprise you.
Ready for an onslaught of 2011 predictions? While it’s interesting to see what people think might happen, I wouldn’t advise putting too much money where other people’s mouths are.
Every year since 2005, we’ve conducted an on-camera experiment to see if the big-shot Wall Street prognosticators you see on TV are any smarter than a typical person on Main Street. Our non-scientific method is simple: We do an interview with David Wyss, the Harvard-Ph.D. chief economist of Standard & Poor’s. Then we hit the sidewalk and ask the same questions of the first people walking by willing to answer them on camera. We put it all on tape, then revisit it at year’s end to see who’s smarter: the amateurs or the pros.
The following 2010 predictions were recorded in late 2009. They include specific guesses as to stock prices, oil prices, and housing prices made by Wyss and random people at a post office in Fort Lauderdale, Fla. Check it out and see who got closer.
To recap: When it came to predicting 2010, people on this street were smarter than Wall Street. While Wyss hit the nail on the head when it came to the gain in stocks, people at the post office were closer on both oil and housing prices.
Surprising? Not to me, because that’s the way it’s been since we started doing this annual experiment six years ago. For example, in 2008, Wyss said stocks would be up, while Main Street said sideways. Neither was close – that year stocks tanked more than 30 percent. In fact, while our experiment with predictions isn’t at all scientific, it does suggest that the future is no more apparent to a Wall Street economist than it is to anyone else.
The truth is that the variables that influence the price of stocks, housing, and oil are numerous, complex, and, ultimately, unknowable. That being said, it’s still interesting to see what people think, whether they’re highly paid economists or random people on the street.
On Wednesday we’ll show you what both Wall Street and Main Street think is ahead for 2011. But in the meantime, what do you think? If we stopped you on the street today and asked for specific predictions on stock performance, housing prices, and oil prices for 2011, what would you say? Leave your answers below, and we’ll see how your answers compare to the 2011 predictions we got from Wyss and people on the street.