Maybe I was Wrong

If you're a regular reader of my blog, you may remember me looking into my crystal ball last month and making some predictions. It looks like a couple of them may be a little less accurate than I had hoped, once again proving that fortune tellers are full of shit.

I'd like to specifically talk about my economic predictions, and clarify where I may be wrong. I still believe that pundits are seriously underestimating the trouble our economy is facing, and I am firmly convinced that we're in for a severe, long-lasting recession. The area I missed is how the international economy will react to our problems. My initial thought was that the global market is well-insulated enough to tolerate a downturn in the U.S. economy. After watching my own 401(k) performance though, I'm no longer so sure. I have two overseas funds... one invests in larger overseas companies, and the other focuses on smaller companies. I fully expected my domestic stocks to tank, but figured that by reallocating a greater portion of my investments overseas I would mitigate my risks.

Not so fast. In the past few weeks I've watched my returns plummet to virtually zero on my small company overseas fund, and my large fund return has dropped by 50%. It's still giving me a hefty return, but it's significantly smaller that a couple of months ago.

It's still far too early in the game to know how it's all going to play out, but considering what I've seen so far, I'm going to throw out my mea culpa now and freely admit that I don't have all of the answers. But then again, this may be a blip and I could be right over the long haul. Face it though, predicting the market is like forecasting the weather. When you're wrong, you're simply giving the people what they expected, and when you're right, you're a hero.