IN JULY, THE WALL STREET JOURNAL lauded University of Dallas professor Michael Cosgrove for turning in a perfeet mid-year interest-rate prediction. He beat 64 economists nationwide using his own formula based on the price of precious metals.
Although Cosgrove has participated in the invitation-only Journal survey for five years, this was his first winning forecast. Most of Wall Street’s premiers estimated 6 percent for the 30-year Treasury bond in June, but Cosgrove daringly proposed yields of 6.9 percent for the Treasury bond and 5.1 percent for the three-month Treasury bill. Both figures were right on the money.
“The ratio of silver to gold- that’s the key,” Cosgrove explains. ’’Precious metals prices tend to reflect the behav-ior of interest rates six to nine months ahead.”
Unfortunately all systems failed him late in the year. He overestimated the year-end long-term rate by a whole 1.7 percent. His excuse? No way of knowing foreigners would buy so many Treasury bonds.
Cosgrove operates a one-man consulting firm, the Econ-oclast, that manages money for industrial clients, including the Southland Corp. and the Teachers Retirement System of Texas. Its name puns the word “iconoclast,” meaning one who contests settled norms-that is, one who uses capricious silver and gold prices to gauge interest rates.
Related Articles
Government & Law
The Lawyer Who Landlords Don’t Want to See in Court
Attorney Mark Melton started helping people on Facebook during the pandemic. Before he knew it, he’d assembled the country’s only group of lawyers focused full time on stopping illegal evictions—and saving taxpayers millions.
Home & Garden
Kitchen Confidential—The Return of the Scullery
The scullery is seeing a resurgence, allowing hosts and home chefs to put their best foot forward—and keep messes behind closed doors.