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The Market Doesn’t Care About “Expert” Predictions

It seems that every January we have to endure the latest round of annual stock market predictions from the so-called, financial “gurus” and “experts.” They’ll hit us with supporting data that’s supposed to give their predictions credibility, and then tell us how to position our portfolios accordingly. For every prediction of a coming crash, there’s another for a blowout positive year for stocks. At least the “bullish” pundits are giving themselves a fighting chance to be right – stocks are up 7-8 out of every 10 years.

I’ve been in the investments business for twenty years and it never ceases to amaze me how bold and silly these “experts” are. These people are not to be taken seriously. But I get it – they have to play this game. They’ll never be asked back on CNBC if their answer is always, “I have no idea where the market is headed.” Let’s never forget that the financial media is not in the business of educating viewers on the prudent way to invest. It’s an entertainment business. Sometimes referred to as “financial pornography.” And doom and gloom sells.

It’s utter nonsense. They don’t know any more than you do which way the market is heading. The market doesn’t care about expert predictions. And the front covers of magazines throughout history are littered with stock market and economic predictions that prove this.

Here’s one of the most famous gems: “The Death of Equities,” – the cover of BusinessWeek 1979. Investors who were scared out of equities missed out on the greatest bull market in history.

the death of equities BusinessWeek 1979

Let’s face it, when it comes to predictions and market-timing, there are only two types of investors: those who can’t do it, and those who know they can’t do it.

If you’ve been a client of ours for any amount of time, you know our position on market forecasts and predictions. We don’t make them. We have no idea where the market is heading in the short-term. No one does. All we can do is make reasonable assumptions, based on historical evidence, that over the long-term equity markets will rise.

So what should we do in 2022? Keep in mind 2021’s most important lesson (which is the same lesson from every year before): Stay a long-term investor in a broadly diversified portfolio. Reduce our anxiety by accepting the market’s inevitable ups and downs.

The market has no memory. We won’t time the market in 2022. We won’t try to figure out when to get in and when to get out – we’d have to be right twice. Instead, we’ll stick to our guns and keep a long-term mindset, so we can capture the ups and ride out the downs.

Not enough “experts” subscribe to this point of view. They’re still trying to predict the future. You’ve probably heard the saying, “The definition of insanity is doing the same thing over and over again and expecting a different result.” We’ve seen people make this same mistake for decades.

We’ll never know when the best time to get into the market is because we can’t predict the future. And if you think about it, that makes sense. If the market’s doing its job, prices ought to be set at a level where you experience anxiety. It’s unrealistic to think the market would ever offer an obvious time to “get in.” If it did, there would be no risk and no reward.


Mike Minter

Mike develops investment portfolio allocations, handles trading and rebalancing, and conducts research and analysis as a Portfolio Manager and Financial Advisor for the firm. As a perpetual student of investing and the markets, Mike considers himself obsessed with the subject. Mike has earned the CERTIFIED FINANCIAL PLANNER™ (CFP®) and Certified Fund Specialist® designations. He is also an active member of the Houston chapter of the Financial Planning Association (FPA).   Read Mike’s Profile HereRead More Articles by Mike

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