…only kidding of course, but the headline tempted you to open up didn’t it?
No, this article is not about clickbait (more on this another time perhaps) but more about my favourite time of the year in the business sections of the news.
That's right, it's the annual Christmas tradition of sticking your finger in the air to come up with a stock market prediction for the next twelve months!
Despite the obvious peril to reputations involved, the ‘experts’ dutifully line up en masse at this time of the year to tell us which stocks to buy, which ones to avoid and what the closing value of the FTSE 100/S&P 500/randomly selected index will be come 31/12/2022.
Given the approaching 100 years of evidence based study and analysis which suggests that expert predictions are ‘roughly as accurate as a dart throwing chimpanzee’* (Tetlock 2015) or ‘little better than might be expected to result from pure chance’ (Cowell 1933) it might seem surprising to some that they continue to be so keen to put their necks on the line.
Naturally, some will get it right and will no doubt remind us of the fact, but let's face it, a stopped clock reads the right time twice a day. If they really could see into the future with any degree of consistent success, do you think they would share their secrets with you?
The appetite for this content seems undiminished over the past 20 years I have been working in this field despite its awful success record. It doesn’t take an expert to figure out why. These articles and content generate interest and excitement, this in turn encourages more funds into the hands of these money managers, on the back of which they and the companies they work for continue to get very rich.
I couldn’t resist the opportunity to throw this one in which is my personal favourite prediction from January 2016 ahead of a scorching year in stock markets which went on to return c12% in the US and 16.75% in the UK by the end of the year.
Not just harmless fun, almost certainly damaging to the financial health of those that choose to take this prescribed medicine, with little or no repercussions for those responsible.
So our recommendation this year remains the same as in previous. Give the depressing news a break over the Christmas period. After all, real wealth is measured in time, experiences and relationships.
Oh, and leave the top ten with the proper experts on Radio One.
Wishing all of our clients and friends a successful and healthy 2022, no matter what happens in the markets!
*Amusingly Tetlock found that the more well known experts performed even worse!