How Clear Is Vanguard’s Crystal Ball?
Vanguard’s annual economic and market outlook has just been published and will no doubt garner some interest in part because it runs to almost 60 pages—long enough to suggest that it must be right. But quantity doesn’t always equal quality or accuracy! So, if you’re going to make portfolio decisions based on this analysis, it might help to look back and see how Vanguard’s 2012 10-year predictions and analysis actually fared.
While my goal is to keep Vanguard honest, this exercise isn’t just to poke a finger at Vanguard’s forecasts. In the world of finance, predictions are the air that many investment firms large and small breath, and yet firms and strategists never seem to be held accountable. We try to follow a different path: Every year for decades Dan and I have looked back and told you what we got right and wrong in our outlook from the prior year.
Vanguard should be held to the same standard.