Wednesday, December 7, 2011

What is "Scarecasting?"

Scarecasting is a term coined by Alan Abelson in a recent editorial titled, "Beware of Scarecasts."

Abelson writes a weekly opinion piece from perhaps the foremost perch in all of financial writingdom... the first page of Barron's each week. Alan is one of the most skeptical, pessimistic commentators out there - which is why I read his column.

As cynical as Abelson may be, in this column he condemns the practice of scarecasting. Scarecasting is, according to Alan, "dire prognostications which are not forecasts."

He writes, "perpetrators of scarecasts, whose ranks have swelled in recent weeks, insist that their dire prognostications are not forecasts, although they sedulously avoid saying exactly what they are. Something a mean little bird told them? A revelation distilled from a bad dream occasioned by eating bean sprouts for dinner? But let's not quibble—we'll call them scarecasts."

I've been seeing more "scarecasts" these days, likely precipitated by difficult market conditions and national news. It seems to me scarecasting may be a good way to sell books and newsletters, but if the predictions are irresponsible and pander to fear, the purveyors are not doing investors any favors.