Hindsight Is 20/20
As the authors noted, while some forecasts turn out to be uncannily accurate, others lead to signiﬁcant losses. Unfortunately, it’s extremely difficult to determine ahead of time which will prove accurate. And if you pay attention, even those who provide the forecasts have admitted the difficulty (though they get paid a lot of money to ignore the evidence).
Here’s what Barton Biggs, who at the time was the director of global strategy at Morgan Stanley, had to say: “God made global strategists so that weathermen would look good.” Keep this in mind the next time you find yourself paying attention to some guru’s latest forecast. You’ll be best served by ignoring it.
As I point out in my book, “Think, Act, and Invest Like Warren Buffett,” that’s exactly what Buffett himself does, and what he advises you to do—ignore all forecasts because they tell you nothing about the direction of the market, but a whole lot about the person doing the predicting.
Larry Swedroe is the director of research for The BAM Alliance, a community of more than 140 independent registered investment advisors throughout the country.