Over the past few months I have been discussing my view that Wall Street analysts and economists, and global economic consortiums such as the IMF have been underestimating the impact of the earthquakes, tsunami and nuclear meltdown in Japan, as well the spillover effect throughout the globe.
I have been stating that Japan's GDP will come in significantly lower than has been reported.
In the June issue of the Intelligent Investor, I reiterated this view.
Below are GDP forecasts for Japan from the IMF released just a couple of months ago.
Last evening, the IMF released its new forecast for Japan's GDP.
As you can see, the IMF now expects Japan’s growth to fall into negative territory for 2011.
You can also see that this latest forecast represents a radical departure from its previous forecast.
After only two months and no significant developments, how can the IMF revise its 2011 real GDP forecasts for Japan from +1.7% to -0.7?
The answer is that they are way behind the curve, similar to Wall Street and virtually every economist (at least) in the U.S.
This proves what I have been saying all along. You cannot rely on forecasts from the IMF, Wall Street, government economists or any other entity tied into the "establishment" because they are almost always behind the curve.
Analysts offer absolutely NO VALUE WHATSOEVER when they downgrade Hewlett-Packard and lower the price target from $52 to $38, as many have done recently after HPQ delivered terrible guidance. It's too late by then.
This mechanism of issuing downgrades after the stock has collapsed is a pattern consistent with the “establishment,” for a variety of reasons.
In some cases, they focus on cheerleading. That is, their goal is to boost investor sentiment.
In other cases, they simply lack the creative thought process required to think outside the box.
In most cases, it’s a combination of the two.
If you want to stay ahead of the curve I know no other way that to patch into our research.
You can either crash and burn, or survive and thrive.
The choice is entirely up to you.
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