If we have a look at the story, Jerome Levy was a guy who flogged off his stocks before the crash of October 1929 and these days has a forecasting institution named in his honour. Sadly, Jerome is no longer is making these predictions because he died in 1967. Luckily though, the forecasting ability is genetic which has seemingly been passed to his grandson, David, and David is the one making the recession forecast for 2015.
David predicted the last financial crisis, which lends some authority to his calls and makes the latest prediction quite frightening. However, in all the stories of the wondrous Levy family forecasting, there is quite a few notable exceptions.
In 2010 Levy predicted a 60% chance of a US recession in 2011. The US grew by 1.7% in 2011.
A notable omission from Levy's previous predictions was a prediction made during an interview on March 9th 2009. The prediction was along the lines of asset values continuing to fall and multiple recessions ahead. And didn't he nail it? Not the prediction so much, but March 9 was the exact day that markets hit bottom and ended the bear market. Markets then proceeded to have a very strong bull market run.
Finally, in an interview with Bloomberg at the end of 2012, Levy said it was time to be defensive. Yet, 2013 saw 19% growth in Australian shares and 48% growth in international shares.
So, you see how this works, get a couple of calls right and the media will keep giving you plenty of attention and seemingly ignore all those wrong predictions. They ignore them because it ruins the entertaining part of their story. As they say a broken clock is right twice a day but I wouldn't really rely on a broken clock.
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