Why You Shouldn't Trust Washington or Wall Street Part 1 of 4

"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 never 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. (www.users.dircon.co.uk/~netking,June 2001)

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 (see www.online-stock-trading-guide.com). That's not a typo. Dr. Fisher was about 25 years off in his prediction. Sorry investors!


Not to be outdone, President Hoover had this to say to a group of businessmen in June, 1930, about 8 months after The 1929 Crash:

"Gentlemen, you have come 60 days too late. The depression is over." (http://www.users.dircon.co.uk/~netking,June 2001) 

No President Hoover, no matter how good your intentions and the backing of any financial "experts" you consulted, you were dead wrong! If one Google's "Great Depression Quotes," you will find dozens of such quotes during the decade of the 30's from all sorts of financial and political experts.

Parts 2-4 will be posted in the near future.

Brian Solik, CRPC is registered with TFS Securities, Inc. and is President and Founder of Wealth Preservations Strategies of NJ. He enjoys educating investors on how to maximize their financial security and minimize taxes. Comments or questions can be directed to briansolik@tfsrep.com.  

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