Financial Planning Fridays #49: Fortune Tellers and Market Forecasters

At Presilium we have been optimistic all year that the market was going to bounce back from one of the worst years ever in 2022. To do this, we needed to tune out an enormous amount of negative news media. We feel that helping our clients stick to their long-term investment plans is one of the most important things we can do for them and their future.

We are now just past the halfway point of 2023, and wanted to look at what the professional market forecasters had predicted for this year. We looked at the targets set at the end of last year made by some of the largest investment companies in the world. These companies have thousands of experts with access to almost any piece of financial data imaginable in order to make these forecasts. Many of them have PhDs and other advanced degrees from the top universities. Their forecasts are read by hundreds of thousands of people all around the world.

However, just like following negative news media, your long-term financial plan can be severely harmed by acting on the reports issued by these market forecasters rather than sticking to a set investment plan.

The 2023 targets are shown here from some of the largest investment firms in the world.

The market is now above every single year-end target on this list. Most of them forecast poor performance and a volatile market in the first half of this year with a possible recovery in the 2nd half.

Warren Buffet wrote in his 1992 shareholder letter “that the only value of stock forecasters is to make fortune tellers look good.”

We wouldn’t make long-term investment decisions based on advice from a fortune teller and will continue to think of professional market forecasters the same way. They were wrong this year and I am not optimistic that they will be any better at forecasting going forward.

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