January 10, 2014
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I know what happened in the past year, and so do you. But if you look back at the predictions, most people got it wrong. Most experts saw 2013 as a year where there would be limited positive returns.
For example, the head analyst at Vanguard predicted a 6 to 7% return. In fact, in a number of surveys they found that, on average, people predicted 7 to 10% return, so 2013 was not expected to be a great year. And many expected it to be a catastrophic year for those in the fixed-income arena because they thought that interest rates were likely to skyrocket as the government pulled back from pumping so much money into the system. It was also anticipated that gold would continue its long-term uptrend and, by the way, gold does not have a great “long-term uptrend;” it’s had a recent uptrend over the past 5-10 years.
So, let’s look at what really happened and what I predicted at the beginning of 2013. I realize I’m not sticking my neck out when I say this, because all I was predicting – or am predicting for the future – is that there are probabilities that things can work for you or against you, and that in a broadly diversified portfolio there is a likelihood in most years that you will get a reasonable rate of return. With the balance of equity and fixed income, when things go poorly in the equity portion of the portfolio, the fixed income will help to stabilize.
Danger: Stock market predictions ahead