Last word notes that anniversary editions are typified by making grandiose predictions for the coming year, decade or century. Over the last 30 years, however, a couple of specific things have happened: first, many predictions have turned out to be wrong and second, the repercussions of an inaccurate prediction have definitely increased.
What’s worse, no longer are these predictions printed on paper that can then be pulped or turned into pet cage lining. Instead, their ghosts haunt the internet for all to see at the tap of a button, in perpetuity. Don’t believe us? Just ask US stock pundit Jim Cramer, who when asked by a viewer whether he should be worried about Bear Stearns on March 11, 2008, replied: ‘NO! NO! NO! Bear Stearns is fine. Don’t move your money from Bear, that’s just being silly.’
So cast your mind back to 1988, if you can. Mark Zuckerberg was just four years old and Apple’s stock price was just over a dollar. How many of you would have imagined that waterbeds would become passé? Or that shoulder pads would soon become consigned to your Halloween costume box? With this in mind, Last word would prefer to spend these column inches highlighting the folly of crystal ball gazing – because even really smart people sometimes get it wrong. Sometimes spectacularly so. Here are some of the best.
The internet will be no bigger a deal than the fax machine (1998):
When IR Magazine was just 10 years old, Nobel Prize-winning economist Paul Krugman predicted that the internet would have no greater an economic impact than the fax machine, saying: ‘As the rate of technological change in computing slows, the number of jobs for IT specialists will decelerate, then actually turn down; 10 years from now, the phrase ‘information economy’ will sound silly.’
Krugman cited Metcalfe’s law, which states that the number of potential connections in a network is proportional to the square of the number of participants. Just as well there weren’t too many internet articles written about it at the time.
No more boom-and-bust economy (2006):
Former UK chancellor of the exchequer Gordon Brown declared the end of boom and bust back in 2006. When the global financial crisis hit two years later, he ended up orchestrating a government-backed bank rescue package totaling around £500 bn ($657 bn).
Google’s stock won’t live up to the hype (2004):
US investor, author and philanthropist Whitney Tilson penned a 2004 article pouring scorn on the tech giant’s IPO: ‘I believe it is virtually certain Google’s stock will be highly disappointing to investors foolish enough to participate in its over-hyped offering – you can hold me to that.’ Ok Whitney, we will.
The Dow will hit 30,000 by 2008:
Robert Zuccaro was the man behind the book Dow 30,000 by 2008: Why it’s different this time. Alas, we maintain that anyone who says, Why it’s different this time should be viewed with suspicion. Not only did the Dow not hit 30,000 by 2008 but that year also heralded the worst financial crisis since the Great Depression and saw the index plummet more than 30 percent.
Okay, fine, we’ll make one prediction. From the dotcom crash and the Asian financial crisis to the European sovereign debt crisis, between 1988 and 2018 there were nearly 20 crashes and financial crises around the world.
An economist would say that past performance may not be indicative of future results, but here’s one prediction we will make: there will be more. I’m off now to stash my latest paycheck under the mattress.