Jeremy Siegel on why so many experts missed the crash

The GFC crash was so obvious — in hindsight.

In the U.S., big banks such as Citigroup and Bank of America were lending enormous sums of money to borrowers who stood no chance of paying it back. Housing prices were so clearly overvalued. Consumers were keeping spending up only by borrowing unsustainable amounts.

Here in Australia we were blindly following along. Although, to date anyway, we seem to have dodged collapsing home prices, we paid the price in different ways.

Over-leveraged companies like ABC Learning, Allco Finance and Babcock & Brown went bust.

Other blue chips like Westfield Group (ASX: WDC), QBE Insurance Group (ASX: QBE), AMP Limited (ASX: AMP) and Suncorp Group Limited (ASX: SUN) are still 60 per cent down from October 2007.

And then there are the real basket-cases, Macquarie Group Limited (ASX: MQG), Goodman Group (ASX: GMG), Asciano Limited (ASX: AIO), Qantas Airways Limited (ASX: QAN) and OZ Minerals Limited (ASX: OZL) — all down more than 70 per cent since October 2007.

How could we have missed it?

Yet so many of us — even (or especially) the experts — did.

Earlier in December, Morgan Housel sat down for a wide-ranging interview with famed Wharton finance professor Jeremy Siegel. Here’s what he had to say when Morgan asked him why so many experts missed the crash.

Are you worried about another market crash? The Motley Fool has a free report titled Read This Before The Next Market Crash. Click here to request your copy now, whilst it’s free and still available.

More reading
5 Safe haven ASX stocks for 2012

This article originally published on It has been updated. Authorised by Bruce Jackson.

The 5 mining stocks we’re recommending in 2019…

For decades, Australian mining companies have minted money for individual investors like you and me. But if you believe the pundits and talking heads on TV, those days are long gone. Finito! Behind us forever…

We say nothing could be further from the truth. To earn the really massive returns, you’ve got to fish where others aren’t fishing—and the mining sector could be primed for a resurgence. That’s why top Motley Fool analysts just revealed their exciting new research on 5 ASX miners they believe could help you profit in 2019 and beyond…


The best way we see to play the global zinc shortage… Our #1 favourite large-cap miner (hint: it’s not BHP)… one early-stage gold miner we think could hit the motherlode… Plus two more surprising companies you probably haven’t heard of yet!

For free access to our brand-new research, simply click here or the link below. But be warned, this research is available free for a limited time only, and we reserve the right to withdraw it at any time.

Click here for your FREE report!