People pretend to do this. But this actually happened to dummy me.
​I came upon a Fortune Magazine investment guide for the upcoming year. It carried articles by and about various investment wizards.
​When it came to the stock market the, wizards said BEWARE. Stocks are way too expensive, they told us. The market is likely to tank. Or make only modest gains. The headline for the main article was TRUMP – WHY THE MARKET IS STACKED AGAINST HIM.
When it came to the economy the wizards told us it would probably stink. There were too many headwinds against it.
I read their predictions carefully. After all, these are top-shelf experts. They work for major Wall Street firms. Fortune rounded them up because they are among the best in their field.
I concentrated on their reasons. This trend is weak. That trend is strong. The Fed will do this. Inflation will do that. The work force has these problems. History tells us times will be tough. The numbers on the economy tell the story. And the story is a sad one.
Their gloom pretty much convinced me. When it comes to stocks and the economy the year ahead looks lousy.
As I got further into the articles a few things sounded odd. This prompted me to flip back to the cover of the magazine. Where I discovered it was a year old. Fortune published it shortly after Trump’s election. What I was reading were predictions for 2017!
Wow! These experts got everything wrong. Next, I Googled predictions from experts who Yahoo Finance hosted. Back in January 2017. Sixteen of them. Predicted virtually no growth in stocks for 2017.
If they were weather forecasters they would have sent you sailing into the teeth of the last hurricane. If they were your doctors you would be dead. Or in pain from their many surgeries on you.
So what went on here? How could these brilliant guys be so wrong about what actually happened in the year ahead?
Several ingredients at play here. Would you like to talk with an expert on the economy? Would you like to get close to an expert on stocks? Plonk your bottom on a barstool in your nearest tavern. Over a few nights you will get a bellyful of predictions from experts.
Their wording won’t be fancy like the wording of the experts in Fortune. But they will be as accurate as those you find in big investment magazines. As accurate as Fortune’s wizards. As accurate as others, like Bloomberg Business online. As accurate as the guys on investment shows on TV.
The reality is that those experts don’t know what they are jabbering about. Or writing about. Their predictions are worthless. Fortune prints them because it needs to stick something between the ads.
The super reality is that nobody consistently predicts what the economy will do. Or what the stock market will do. Not the wizards in Fortune. Not the top government analysts. Not the tavern experts.
It’s not that they are stupid. The problem is that there is no way to predict such things accurately. Sorry.
One of the many reasons why the Fortune wizards were wrong is that they let their emotions color their thinking. Like many of their colleagues they don’t like Trump. Maybe it’s his ties. Or his hair. Or his nasty tweets. Or his boasting. Or his arrogance. They don’t like him. To many folks in the Big Apple Trump is a slob.
Nothing wrong with that. Unless you are in the predicting business. In this instance the wizards’ prejudice pointed their noses in the wrong direction. Up.
Even if they were not prejudiced, there is a fifty-percent chance they would be wrong about the market and the economy. That is just the way things are.
For the record, these gurus missed a 35 percent rise in the stock market. That is a big miss. That is equivalent to your guide taking you to Staten Island for the St Patrick’s Day parade. Which happens to occur in Manhattan.
The gurus also missed the healthy figures on the economy throughout the year.
(By the way their tips for individual stocks did well. Their attitude was that certain stocks might weather the storm the market was likely to suffer. The storm did not come. Instead the rising tide lifted most boats – including their stock picks.)
So…how do you suppose stocks will do in 2018? What do you predict our GDP and employment figures will be? Don’t be meek. Your guess is as good as mine. As good as those of some of the top guys on Wall Street. As good as those of the Gurus Maximus of government.
You know as much as they do. Whether you occupy barstool or easy chair.
From Tom…as in Morgan.​
​Find Tom on Facebook. You can write to Tom at tomasinmorgan@yahoo.com.