We spend a lot of time reading forecasts. The financial news media is rife with new articles every day that take a position on the near-term future of inflation, interest rates, and stock prices. But are these forecasts of any use? James Montier, an author on the topic of behavioural finance, says no.

He has compiled and aggregated past forecasts for a number of popular financial metrics. The following chart illustrates how well forecasts of inflation have approximated actual inflation over the last several decades:

Note that the forecasts of the deflator actually lag the actual deflator! This forecast is telling you what happened, rather than what is about to happen!

Sometime in the next 12 to 20 months (or even sooner), we’re looking at the very real possibility of interest rate hikes. If you’re caught off guard and holding the wrong exchange traded funds (ETFs), it could wind up being costly.

What goes down must eventually come back up, right? The rock-bottom interest rates we’ve been enjoying for the last few years aren’t going to last forever. They won’t be as necessary to help goad an economic recovery, so as the picture brightens both here and around the world, they’ll naturally have to go back up.

Donald Marron asked what assets the United States could sell. He was responding to a point raised by German politicians about Greece. They had suggested that Greece should start selling some of its islands, to pay off its sovereign debt.

Donald has a bit of fun with this, mixed in with some more serious consideration. My concern, is that the bigger, uglier truth goes unspoken. The truth is that we have already sold a $3.7 trillion slice of our nation.