One of the most common excuses made by forecasters is, “I wasn’t wrong, I was just off with the timing.” But that fails to acknowledge that timing is an integral part of any forecast. Imagine a weather reporter predicting rain on Monday and claiming he was still right when the downpour doesn’t arrive until Thursday.
We need to demand the same accountability from the commentators who have been predicting rising interest rates for about five years now. Even if rates do rise significantly in the next year or two—which would cause bond prices to fall—they won’t be able to claim their predictions were accurate but merely late. The only honest thing to do is admit they were dead wrong—and to stop making forecasts that encourage investors to abandon their long-term plans.
The bond bears had already been growling for a couple years when I wrote a column on this topic for a 2011 issue of MoneySense. The article quoted an advisor who had arrogantly told me “the bond index funds you recommend in your Couch Potato portfolios will soon be a disaster.” Like just about every other commentator at the time,