Predictions for the coming year are all the rage in financial journalism, especially among the more populist publications: BusinessWeek and Fortune. It seems the more intelligent people (read: The Deal, The Economist) understand flaws in seeking exactness and are much more cautious when asked about what the future will hold. Many journalists are publishing their stories of the year and their predictions for 2008. One would be wise to just gloss over these for the most part and ask one important question: how much of this year's 'credit crunch' is actually a crisis and how much of it is actually a return to historical risk premiums and reasonable mortgage lending standards--such as as actually proving income and not falling into the pits of esoteric neg-am loans. In theory, home values don't fall nationwide, but then in theory, financial journalists and economic 'experts' are the real experts.
Happy Investing,
Faro Research
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