Why You Shouldn’t Listen to Market Forecasts

You know, we talk about market forecasts and again, people love to see what the economist thinks going to happen or what is the lead person at Citibank. I pay no attention to them whatsoever. Literally not. Yeah. I haven’t read a market forecast. I’ll bet you in 15 to 20 years, I’d rather grab an eight ball.

I think it’s going to be more accurate, more interesting and more fun. What are your thoughts on market forecast?

Yeah, I mean, I, I think that I, don’t that they’re not accurate. I mean that this has been studied. they don’t help you predict, uh, what’s going to happen in the market for the reasons we just talked about. Uh, but I do think that they cause behavioral errors. Um, I, mean, there, there, are, I remember I did a talk for.

Fp Canada’s financial planning week uh, conference last week and I had a slide on this on market forecast. and I gave the example of I gave two examples There, there was one 2016 headline from the economist at the Royal Bank of Scotland and the headline was something along the lines of sell

Yeah. Get out.

Yeah. and since then of course markets have been really really positive and then there’s the famous uh business week magazine cover from Uh, the 1970s, I think.

Yeah. I had that framed at one point.

Okay. yeah. the death of equities. Yeah, exactly. So, I mean, people read that and if they don’t know better, which a lot of people don’t, they’ll take action on it. They’ll, they’ll reduce their equity allocation. They’ll get out of stocks. They’ll hold off investing the cash that they’ve been sitting on.

All that kind of stuff. And that costs investors in the long run. So, I mean, market forecasts are what they are, but people have to understand that when it’s coming from a source like that, like a media source, they have a bias to publish stuff that’s interesting and that’s going to grab eyeballs, not to publish stuff that’s going to help you manage your portfolio better.

So people really have to understand, uh, why that type of information makes it into headlines and makes it into the media. It’s not because people want to help you. It’s because it’s, it’s, uh, fear inducing, which gets your attention.