Loans and cash

One wonderful definition is that an expertis “somebody from out of town,” which is another way of saying that distance lends enchantment.
Another definition, and probably the best one for our purposes, would identify an “expert” as anybody who manages to get quoted in a newspaper or magazine or has a publicist with enough clout to wrangle an interview on television or radio. Considering the explosion of media outlets in recent years devoted to finance and investing, including the proliferation of financial Web sites, this definition of an “expert” would have to be considered fully diluted, if you get my drift.
“Experts” have always had a difficult time predicting the future, although this has never stopped any of them from making predictions. And it probably will not surprise you to learn that the U.S. government ranks right up there when it comes to the list of “experts” who have made pronouncements about the future that have turned out to be spectacularly wrong.
For example, every now and then over the past 30 years we have been subjected to an “energy scare” and we are told that energy supplies are running out. Every time these energy scares have surfaced, they turned out to be false alarms. But did you know that dire predictions of an imminent “energy doomsday scenario” have been going on for the last 115 years?
But even a genuine, card-carrying expert with a track record of accomplishment and insight can be completely out of sync in any given situation and therefore way off the mark. Why? For one thing, even genuine experts are out there taking their best educated guess, just like the rest of us. And they can be influenced, like everybody else, by the subconscious idea that  a trend in force for a long time will simply continue, indefinitely, into the future. And that means that most experts are not very good at identifying major turning points in the economy, the stock market, or the individual stock that has been in favor or out of favor for a long time.
One rule of thumb that has developed over the years is that whenever a certain trend in the economy or the stock market manages to make the cover of a general-interest magazine like Timeor Newsweek, it’s time to consider the possibility that this particular trend has pretty much run its course. Aclassic example of this phenomenon is the Newsweek cover, dated December 2, 1974, entitled, “How Bad a Slump?” When this issue of Newsweekhit the stands, the economy was in a severe recession, the stock market had been sliding for two years, inflation and oil prices had spiraled out of control, and interest rates were in the stratosphere. So “How Bad a Slump?” seemed a perfectly legitimate question to ask. What nobody knew at the time was that the slump had already ended, the stock market had already hit bottom, and both inflation and interest rates had already peaked. Amore recent example of a magazine cover signaling the end of a financial trend was the December 27, 1999, issue of Timemagazine in which Amazon.com founder Jeff Bezos was named Time’s “Person of the Year.” That issue of Timecoincided with the exact peak of Amazon.com’s stock price, which proceeded to fall from $113 to as low as $19.38 over the following year. This does not imply that Jeff Bezos did not deserve the honor—only that Time’s cover story resulted in large part from a very newsworthy trend (the incredible stock market performance of the Internet stocks), which had been in force for a long time and which by that time had reached a ridiculous extreme. Time’s cover story signaled the end of the bull market not only for Amazon.com but for every other Internet stock, all of which plunged dramatically during 2000, and many of which actually went completely out of business.
This strategy of betting against magazine covers should not be confined to economic and investing issues, by the way. Here is another classic example of expert opinion that was off the mark. In the October 17, 1988, issue, Sports Illustrated ran a cover story on the invincible Oakland A’s, who were about to face the Cincinnati Reds in the World Series.