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While The Subject Of Fed Rates Is Hot...

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Just out of interest, in a book I recently read, it shows that the "experts" are usually equally hopeless as even correctly prediting the direction of interest rate change, never mind the amount.

An extract:

"The table shown in fugure 1-9 (not shown, obvious), put together by Bianco Research on January 2003, reports the results of Wall Street Journal surverys of leading economists regarding their forecast of the level and direction of interest rates 6 months forward. Currently, 55 economists are surveryed in this semiannual report. What the table shows is that fully 71 percent of the time (30 out of 42) the consensus of economists could not even forecast the direction of rates, either up or down, for 6 months forward. This record is so much worse than the probable outcome of a series of coin tosses that it argues that the tools that economists use are fatally in error."

(extract from The Triumph of Contrarian Investing - Ned Davis)

Make of that what you will!

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Very interesting that.

I tend to think the "experts" are in fact VIs and predict what they want to see.

I have seen many a bear on here (VI too), myself included, that says interest rates should go up, but probably will remain static. Why can't those "experts" be like that?


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Aye, NDL. I think that "experts" are just as suspectible to being caught up in the rush of the market and economy as anyone. They are ultimately only human beings with an opinion, and their opinion and mathematical models are all ultimately based on the direction the market is sailing at the time in and increasingly positive/negative effect on sentiment.

As HPC is something of a contrarian view (or originally was.. now it's more akin to a cult) I will venture a little further to add that the book is a very interesting read, and mades a very damming case against following the herd if you want to be a successful investor. The key concept was impressed upon me and while reading the book, and what I have most pondered, is the inverse link between liquidity and sentiment:


"If everyone's fully invested, they expect prices to rise, but if everyone is already fully invested, there are no buyers left to drive prices higher, and prices can only fall. Almost by definition, a top in the market is the point of maximum optimism, and a bottom in the market is the point of maximum pessimism."

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Anybody who knows anything about academic economics will tell you that the rational_expectations model and the efficent market hypothesis show you the most highly probable future interest rate at a given point in time. can be determined by the current short interest rate price for that given STIR futures market.

Sterling Flat at 4.50% for the forseable future.

Dollar Mar 06 will be 5%

Swisse 2% by year end

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  • 339 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?

      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%

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