Correction: A previous version of this column incorrectly stated that Stansberry Research did not provide a full accounting of its investment recommendations. Stansberry Research provides performance records to its paid and free subscribers on both a monthly and annual basis.
Thanks to the Real Money readers for the great feedback on my last column, "Fed Up With the Fearmongers." Apparently, a lot of people feel the same way, because I got several emails and nice comments about the piece.
It's tempting to declare that we're in an era where fear is more pervasive than ever, but a superlative like that would only feed the flames. I don't really believe it, in any case.
As it happens, Dimensional Fund Advisors creates plenty of materials to combat the Chicken Little effect. The sky didn't just start falling in 2014, or 2012, or 2009, or 2008, or 2007, or whatever recent year people believe everything suddenly became so horrible.
I want to dissect some of the horrors that never transpired. But before I get to my short list, let's pause for a moment in recognition of Ron Paul, who has reinvented himself as a spokesman for Porter Stansberry's scare factory.
Because I don't watch much daytime TV anymore (you can guess what channels I used to watch, back in my stock-trading days), I hadn't seen his "Ron Paul Warning" videos until I had a houseguest who was watching Fox News the other day. I stopped in my tracks when I saw the former congressman spouting things like, "The savings of millions could be wiped out" due to the "coming currency crisis."
Many people watching that commercial, or visiting the Ron Paul Warning website, probably don't realize Paul is now a pitch man for sketchy "research" products sold with sensationalistic headlines.
But enough of Ron Paul and his new associate, Porter Stansberry. Let's do a quick rundown of some of the scary predictions that never came to pass. Many of these are thanks to Weston Wellington of Dimensional Fund Advisors, who does presentations showing some of these historical moments that many would rather forget.
(For the record, I also wrote about these predictions in a column for the Santa Fe New Mexican in June. They're worth sharing with Real Money readers as well, in my humble opinion.)
-- Time magazine, Sept. 9, 1974: "A Gallup poll published last month found that 46% of adults feared a depression similar to the classic one of the 1930s." Well, I think we all know by now that U.S. monetary policy was a train wreck in the 1970s. But whatever happened to that 1930s-style depression that everyone feared? Oh, right. It never happened.
-- Business Week, Aug. 13, 1979: Cover story, "The Death of Equities." An excerpt from the article reads: "The old attitude of buying solid stocks as a cornerstone for one's life savings and retirement has simply disappeared. ... The death of equities is a near permanent condition." Permanent? Yeah, I'm not really thinking that, while I'm looking at the Nasdaq hitting new highs for the third day in a row. And then there's that little matter of everything that happened after the bull run for U.S. stocks began in 1982.
-- Forbes magazine, July 19, 1993: Cover story, "Bearish on America." Morgan Stanley's Barton Biggs advised readers to sell U.S stocks, saying Bill Clinton's policies were bad for America. In fact, the S&P 500 notched a compound return of 18.5% over the next seven years. This is why predicting market conditions based on political views is a really, really bad idea. It's also why Ron Paul's commercials appeal to those who still -- after more than six years -- are waiting for Barack Obama to confiscate their money or crash markets or declare martial law, or whatever he's supposed to do. For the record, I didn't vote for Obama, but I'm beyond tired of hearing about the cataclysmic events he's supposed to set in motion.
-- Business Week, March 2, 1998: "Year 2000 is a unique and unprecedented event ... the first economic disaster to arrive on schedule." Despite the panic, Jan. 1, 2000, pretty much came and went without a hitch. I remember watching the New Year's Eve celebrations on TV at a relative's home that night. As the clock struck midnight around the world, perfectly uneventfully, it became evident that by the time the ball dropped in Times Square, we could drink some champagne safe in the knowledge that our computers would still work and ATMs would still dispense cash.
-- Fortune magazine, Sept. 28, 1998: Cover story, "The Crash of '98: Can the U.S. Economy Hold Up?" Fortune columnist Joseph Nocera wrote, "This time it is different. This time the market won't be so quick to bounce back. ... Who can look at the world and not conclude that things have changed dramatically?" It's kind of hard to remember 1998 at this point. That's probably because the S&P 500 finished the year with a total return of 28.58%. For investors who stayed in, the summer and fall pullback is now a distant memory. Those who panicked and bailed were the ones who felt the pain.
And just for fun, here's a wildly wrong opinion about a single stock:
-- Money magazine, April 2004: Excerpt from story: "Apple's (AAPL) share of the worldwide personal-computer market has shrunk to 2% from 3.2% five years ago. ... It's unclear what (Steve) Jobs can do or plans to do to turn around Apple's fortunes." Well, sure, it was unclear in 2004. But it became clear pretty quickly, didn't it?
This was a long-winded way of saying: The scary predictions you hear, even from supposedly intelligent and informed sources, aren't necessarily right, and they can even be dangerous.
