Economists and financial experts are constantly trying to predict the future of the real estate industry and finance overall. Those predicting the 2008 financial crisis and housing boom crash are keeping a close eye on the future. These economists have been eerily correct over the last few years and here are some of the top 8 financial predictions that have come true over the last few years.
- Oppenheimer analyst Meredith Whitney predicted that Citigroup would lose billions in 2007. The financial services Corporation was forced to cut its dividend to counteract billions of losses of bad assets and ultimately contributed to the subprime mortgage bust. She found a hole in the company's strategy and encouraged her clients to stay away from the company's stocks.
- In a 2006 International Monetary Fund speech, Nouriel Roubini predicted subprime mortgage lenders would be the cause of the housing bubble burst and it would start with the subprime lenders and increase foreclosures and the loss would be spread to banks and multiple financial institutions.
- Euro Pacific Capital president Peter Schiff also predicted the 2008 financial crisis suggesting that the US economy would weaken from too much consumption and borrowing without enough production or savings.
- The Big Short film was the inspiration by Michael Burry predicting the housing market crash in 2004. This young stock market investor and hedge fund manager noticed a looming bubble in subprime mortgages in 2004 and bet against the housing market effectively shorting the bond market and winning big when banks and markets started to collapse.
- Economists in St. Louis Missouri forecasted rising federal rates three times by the end of 2017 and it did.
- Warren Buffett predicted that the S&P would outperform hedge fund Protege Partners and instead invested in the Vanguard 500 index fund, which returned nearly 5% more than the Protege Partners.
- Seattleite Brooksley Born warned back in 1998 that over-the-counter derivatives would play a role in the international economic downfall. Credit default swaps contributed to the financial crisis and she was awarded the John F. Kennedy Profile in Courage Award for her efforts to bring the issue to light before it was too late.
- The president of Dohmen Capital Research, Bert Dohmen, correctly predicted the bear market would last 20 years in 1981 followed by a 30-year bull market which started in 2001 as predicted. This has caused over $21 trillion in national bank debt.
What does all this mean? Well, we want to pay close attention to the predictions of the future. One is investing in real estate now and hanging onto it. As always, this remains a solid investment so long as you don't buy high and sell low... as with anything.