Pundits, Predictors and So Called Experts

The so called experts and pundits would have us believe that they can predict what is going to happen with the markets, economy, weather,  politics and just about everything else.  The reality is that there are many things that we simply cannot predict with any accuracy.  Moreover, the experts often get it wrong even when they have experience.  This is often because their predictions are based on their personal past experience and not future trends or events which cannot be accurately judged.

Consider some of these predictions or thoughts

“Stocks have reached what looks like a permanently high plateau.”
–Irving Fisher, professor of economics at Yale University, October 17, 1929

“Forget it, Louis, no Civil War picture ever made a nickel.”
–Irving Thalberg’s warning to Louis B. Mayer regarding Gone With the Wind

“We don’t like their sound. Groups of guitars are on the way out.”
–Decca Recording Company executive, turning down the Beatles, 1962

“There is no reason for any individual to have a computer in their home.”
–President of Digital Equipment Corporation, 1977

A firm called CXO Advisory Group investigated the accuracy of predictions by stock market experts. To investigate they reviewed 6,582 forecasts for the U.S. stock market offered publicly by sixty eight different experts.  These included both bulls and bears employing technical, fundamental and sentiment indicators from 2005 – 2012.   The CXO study found that the accuracy of the predictions was only 46.9%  (source  www.cxoadvisory.com/gurus/).

Clearly it is difficult to predict things such as the markets, what the economy will do or even what movie will be popular.  These things are impacted by a myriad of factors that we often do not know.  It can be hard to research these things because often we don’t know what we don’t know!

At Carver Financial Services Inc. we do not believe that anyone can consistently predict what markets or individual investments will do over the short term.  Happily we also believe that you do not need to make predictions in order to successfully invest over the long run.  We believe that successfully investing means you can maintain and enhance your lifestyle in a manner consistent with your risk tolerance.  To do so we believe you must allocate your portfolio that meets your personal needs, objectives and risk tolerance and then make adjustments based on factors that we know such as current tax laws, interest rates and your income needs.   We believe that one must take a proactive approach to rebalancing the portfolio based on changes to your situation, prevailing tax laws and the target allocation of the investments;  not based on predicting what may happen to the markets or economy.   We have developed and refined a process that takes a holistic approach to managing your financial life utilizing these principles to help you achieve your personal vision.  This involves looking at your tax planning, estate planning, asset protection and personal goals and then developing a coordinated and customized plan that is monitored and updated.

While it may be entertaining to hear the latest forecast or prediction this should have little bearing on your investment or financial planning decisions.  Frankly our process is not exciting,.  However, most of our clients are investing with us to help maintain and enhance their net worth not for excitement.   Please contact us with questions about our process, your personal planning, your portfolio or if we can otherwise be of service.  We are happy to discuss your needs, questions or concerns without cost or obligation.    We look forward to hearing from you!   Contact us at carverfinancialservices@raymondjames.com or www.carverfinancialservices.com .

This information has been obtained from sources considered to be reliable, but we do not guarantee that this material is accurate or complete. Opinions expressed are those of Randy Carver and are not necessarily those of RJFS or Raymond James. Raymond James Financial Services, Inc. and its advisors do not provide advice on tax issues, these matters should be discussed with a tax professional. Investing involves risk; investors may incur a profit or loss regardless of the strategy or strategies employed. Asset allocation and diversification do not ensure a profit or guarantee against loss. Working with a financial professional does not ensure a favorable outcome.  Opinions are as of 4/4/17 and subject to change.