The Only Forecast That Matters

The Only Forecast That Matters

January 05, 2023
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Most investors love economic and market forecasts. With the uncertain and volatile markets, our brain craves some sort of idea of what the future holds. But the markets are unpredictable – evidenced by the fact that no one can consistently predict them with accuracy. Of course, a certain forecast will be right from time to time, just like a broken clock. But market forecasts are not reliable, no matter what your brain tells you.

I even asked the Open AI artificial intelligence assistant to write an economic and market forecast for 2023.  Maybe the supercomputers have finally figured everything out for us.  The artificial intelligence assistant could not generate a forecast but instead gave me general information on how forecasts are made. The surprising part of the response was the final paragraph which sounded like I wrote it.  Computers might have a better understanding of human behavior than we give them credit for.

Open AI Chat GPT: “It's important to note that economic and market forecasts are inherently uncertain and are subject to a wide range of risks and variables. As such, it is not uncommon for actual outcomes to differ significantly from forecasted scenarios.”  

Unlike mainstream market and economic forecasts, my forecast is reliable and robust because it is based on enduring investment truths and investor behavior. These factors are more dependable than market outcomes and more important to an investor’s well-being.

My Forecast For 2023

In full disclosure, the following forecast is nearly identical to my forecast from last year and years prior to that.

  • The economy/market will do something that surprises us (and the experts). In hindsight, we will wonder how we didn’t see it
  • The financial media will emotionalize headlines and short-term market moves to entice you to tune in - so they can achieve better ratings
  • Investors who watch the news and stock market often will experience more stress than those that don’t
  • Investors that move to cash, waiting for a “better time,” will suffer significant uncertainty and anxiety about when and how to get back in
  • Your investment decisions and reactions to market events will ­­have a significant impact on your personal investment return
  • You will be tempted to change your investment strategy based on market performance, expert forecasts, and/or your personal beliefs about the future

Conviction, patience, and discipline are virtues every investor should develop. They aren’t easy, yet they are essential for your success. As your advisor, one of my most important roles is helping you ignore the noise and focus on what really matters to your financial success.

I wish you a prosperous, fulfilling, and happy 2023. Thank you for allowing me to be your trusted partner along the journey. 

 

 Best Regards,
Jason

 

©2023 The Behavioral Finance Network