As we roll out of 2014, and look forward to 2015, people continue to ask and forecast interest rates. And the most often cited “experts” are economists, particularly Wall Street economists.
Yet year after year, Wall Street economists are totally wrong in their forecasts. In fact, flipping coins would have provided much more accurate calls for every year in this century. So what are they saying now, and why do we care?
As a new year’s resolution, I am foregoing reading or commenting on Wall Street economists’ forecasts. And although a stopped watch is right twice a day, meaning these people may yet “get it right” this time, I have never met anyone who could consistently predict the direction of interest rates, and fewer still who could profit by that alone.
More important, are you positioned to benefit or survive dramatic changes in one direction or another? If not, why not? “Surprises” happen every year, in fact almost every week. It does you no good to be caught on the wrong side when an event happens that “nobody could predict.” If you are in the housing market, it seems logical that if you can accept today’s historically low interest rates as a gift, you should act on it. Maybe we drop another 1/4 percentage, or 1/2 percent. Will that dramatically change your life?
A major move which could impact you is more likely a move up from here in rates, not down. So protect yourself from that possibility.
The link below has the Bloomberg tv segment on this subject:
Ray Wedell, Realtor
Chartered Financial Analyst, CFA