In the past 25 years, only a few economists and financial experts have been able to crack the code and accurately call future events and trends such as the 2008 financial crisis, the rise of internet retailers, or even online video streaming.
Those who did, however, have benefited handsomely from their educated suppositions.
From Warren Buffett’s $1 million bet on the S&P to the CIA’s expert analysis on oil production — here are 12 financial predictions from the past 25 years that actually turned out to be true.
The Bankrate Daily
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Meredith Whitney predicted Citigroup would lose billions in 2007
Meredith Whitney, an Oppenheimer analyst, raised eyebrows when she found a hole in Citigroup’s strategy and urged her clients to stay away from the company’s stocks.
As she predicted, the financial services corporation based in New York City was forced to cut its dividend to counteract billions of losses from bad assets and ultimately contributed to the subprime mortgage market collapse.
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Nouriel Roubini predicted subprime lenders were in trouble in 2006
Before the housing bubble burst in 2008, Nouriel Roubini predicted the crash in a 2006 speech to the International Monetary Fund.
Roubini said the crisis would start with the subprime lenders, who were already in trouble at the time due to an increase of foreclosures, noting the losses would be spread to other banks and financial institutions.
“And my concern today is that the bursting of the housing bubble—we have not seen it yet—is going to lead to broader systemic banking problems,” Roubini said.
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Jeff Bezos bet online retail was the future
In 1999 Walmart was investing heavily in brick and mortar retail. Jeff Bezos, on the other hand, was gambling with online shopping and predicted that in the future consumers would buy the majority of their goods online.
Today, Bezos’ bet has clearly paid off. Not only does he top the list of richest people in the world, his company, Amazon is the number one online retailer in America with an average of 1.87 billion users per-month.
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St. Louis economists forecast rising Fed rates
A St. Louis firm was the most accurate forecaster of 2017 according to the Wall Street Journal’s monthly survey of economists.
The forecasting firm Macroeconomic Advisors predicted the Federal Reserve would raise interest rates three times by the end of 2017 — and it did.
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Warren Buffet bet S&P would outperform Protege Partners
In 2007, Warren Buffett made a massive $1 million bet that low cost index funds from the S&P would outperform hedge fund Protege Partners over a decade.
In 2017, Buffet saw his choice fund, the Vanguard 500 index Fund return 7.1 percent, compounded annually. While Buffett more than doubled his bet, his competitor’s return averaged 2.2 percent.
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Roger Ebert predicted online streaming services
Before Netflix and Hulu dominated online entertainment, Roger Ebert, an American film critic, historian, journalist, screenwriter and author, predicted streaming services would beat out traditional cable entertainment services financially and in popularity.
“We will have high-definition, wide-screen television sets and a push-button dialing system to order the movie you want at the time you want it,” Roger Ebert eerily said in an 1987 interview with Omni Magazine.
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Brooksley Born warned derivatives could contribute to a financial crisis
Nearly a decade before the 2008 financial crisis, Seattle native Brooksley Born warned that over-the-counter derivatives would play a role in a national economic downfall.
Born recognized a financial cataclysm including credit default swaps that contributed to the financial crisis. She was later awarded the John F. Kennedy Profile in Courage Award for her efforts to bring the issue to light before it was too late.
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Bert Dohmen predicted a 30-year bull market would follow the bear market
Using cycle studies, Bert Dohmen, president of market timing company Dohmen Capital Research, correctly forecast the bear market would last 20 years in 1981, followed by a 30-year bull market — which started in 2001, as predicted.
He wrote for Forbes that at the time, he didn’t know what would cause a 30-year bull market, which is now attributed to $21 trillion national bank debt.
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Peter Schiff recognized consumption weakened the US economy prior to 2008
In 2006, Euro Pacific Capital president Peter Schiff appeared on several news shows predicting the 2008 financial crisis.
A year before his television crusade, he told Kudlow & Company that the US economy would weaken from too much consumption and borrowing without enough production or savings. Correctly predicting the devastating financial crisis, Schiff also recognized that Americans would stop consuming all together, making it more difficult for the economy to rebound.
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Michael Burry predicted the housing market crash in 2004, eventually inspiring the film ‘The Big Short’
Michael Burry’s early discovery of the inevitable 2008 housing market crash became the inspiration of the film, “The Big Short” written by Michael Lewis. Then 32-year-old Burry was a stock-market investor and hedge-fund manager when he noticed a looming bubble in subprime-mortgages in 2004.
In an unpopular act, Burry bet against the housing market, effectively shorting the bond market and winning big when banks and markets started to collapse.
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The CIA predicted oil prices and demand
Right before George W. Bush became president in 2000, the CIA published a 70-page report predicting what the world would be like in 2015. The report forecast that there would be enough energy resources to meet demand at a reasonable cost for consumers.
The CIA’s prediction rang true when US oil production increased in the years leading up to 2015 and the cost of natural gas was stayed low.
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Warren Buffet bet Bank of America would make a comeback
In 2011, Berkshire Hathaway CEO Warren Buffett struck a $5 billion deal with Bank of America, making a bet that the bank would make a comeback after having legal issues in wake of the financial crisis.
His decision paid out an annual dividend of 6 percent and guaranteed Berkshire received preferred shares. The deal also gave Buffet the option to buy 700 million shares of the bank’s common stock at $7.14 per-share by 2021 — an extremely discounted price.
Buffett’s deal was triggered in 2017 when the bank passed the Federal Reserve’s “stress tests,” boosting its annual dividend.