Every year around this time the big brokerage firms, scores of analysts and the financial media talking heads pull out their crystal ball to predict which stock will outperform next year and where the overall stock market will be one year from now. Our past January newsletters have discussed our opinions of these predictions and how we feel they are a disservice to investors.
Some points to consider when watching or listening to any New Year predictions:
- How many of these analysts or brokerage firms predicted the pandemic of 2020? None. Often times, events can not be predicted but happen anyway.
- Where were these pundits through the stock market volatility of last spring? Very few were talking about the predictions they made only a few months earlier for 2020.
- Are they ever held accountable for their predictions? No, they are not and after most forecasts are far from reality, they are given a free pass to provide guesses for the future again.
- How do these predictions advance an investors financial goals like saving for retirement or college? They don’t and often are detrimental to investors goals and portfolio performance.
These market and stock predictions should be considered nothing more than entertainment. Most investors are best served with an investment plan that is part of a Financial Life Plan. This will tailor their investments to their financial goals while taking into account their tolerance of market risk.
