Broker Check

Don't Be The Blind Chicken of 2023

January 17, 2023
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I’ve advised that on our first Fred After Dark broadcast of the year we’d look into our crystal ball(s) and come up with some predictions about the future. Predications are always a fun exercise – for me at least, because I know how fruitless the exercise is and how far the predictions usually wind up from the actualities. The “fun” of such exercises of course are muted if one places any stock in them for making investment decisions.

Having someone or several someone’s or large, well respected and known institutions making the predictions provide investors with a sense of security (albeit a false sense) that multiple, knowledgeable somebodies can foretell the future. Despite the dismal track records each year, we receive these predictions, often heralded and promoted by the media. It does generate ratings and readership and after all, isn’t that what their game is about? The late John Bogle (founder of Vanguard) aptly described this as “infotainment!”

A good friend used to always write a column after the year end and revisit well thought out predictions and the fun was in how ludicrous they appeared in retrospect. I don’t collect predictions as he did but I did go back and look up what some of the best and brightest of Wall Street predicted for the “market” (the S&P 500 which many refer to as such) for the year ended 2022.

 

The Year End 2022 Predictions:
Oppenheimer                   5330

BMO                                 5300

JPM                                  5050

RBC                                  5050

Citi                                    4900

UBS                                  4850

Cantor                               4800

Barclays                            4800

Wells                                 4715

BofA                                  4600

MS                                     4400

So where did the market actually wind up? 3939.50 at the close on 12/30/2022. And, if you followed the predictions of the so-called best and brightest? Well...!

There is a simple lesson to be learned here. Enjoy the predictions for what they really are: guesses that entertain rather than inform. Better to depend upon a well thought out, executed and disciplined investment plan/strategy than on guesses that never hit the bulls eye except by accident – or worse, don’t even come close. And to whomever actually does so and brags about it, I refer you and them to the story of the blind chicken who finds the kernel of corn by accident!