Annual Forecasting Dinner

The CFA Society of Atlanta had its annual forecasting dinner tonight. I have two thoughts related to this...

1) As an aside, I was reminded of my recent post referencing an article about the intellectual benefits of living in a big city. Our speakers were OK, but the New York chapter? For their most recent soiree they got ... the Secretary of the Treasury!

2) More to the point, I have the answer to some questions you might have. Have you been wondering how the investment experts at UBS could have been left holding the bag on over $13 billion of worthless CDOs? Have you been wondering how the investment experts at Bear Stearns could have lost almost $7 a share in a single quarter? Well, wonder no more. Tonight I learned the truth ... They are smoking some good s--t! Both those firms are predicting 12/31/2008 S&P 500 at 1700. That's a +17.6% return ... for an economy where the best-case scenario is that it narrowly avoids recession in 2008.

For the record, the predictions for 12/31/2008 that I put in for the contest were

S&P 500 = 1322 (a 10% drop from its 12/31/2007 value, which I now think is overly pessimistic, but I do think the market is going to be slightly to moderately down for the year)
Well, so much for overly pessimistic. The S&P500 ended down 38.6% at 903. 1700 my butt.

Ten year Treasury note yield = 3.70% (down from its 3.79% value today)
Yield as of 12/31/2008 = 2.21%

Fed Funds Rate = 3.50% (down 75 basis points from its value today)
Fed Funds Rate = 0.25% (!)