Most investors love economic and market forecasts. With uncertain and volatile markets, our brain craves some idea of the future. However, economies and markets are unpredictable, evidenced by the fact that no one can consistently predict them accurately.
For example, in October of 2022, Bloomberg gave a 100% chance of a recession within twelve months. Not only did a recession not occur, but markets went up significantly. Anyone heeding such a forecast made a very costly mistake. There are many more similar examples of financial forecasts getting it completely wrong.
Unlike market and economic forecasts, my forecast is dependable and robust. It is based on enduring investment truths and investor behavior, which are more reliable than market outcomes and important to an investor’s well-being.
My 2025 Forecast
In full disclosure, the following forecast is nearly identical to previous forecasts:
• The economy/market will do something that surprises us (and the experts)
• The financial media will enrich themselves by emotionalizing headlines and short-term market moves to entice you to click and tune in. It’s nothing more than clickbait
• Investors who tune into the news and evaluate their performance often will experience more stress and anxiety than those who don’t
• Investing in the stock market will be unpleasant at times. Historically, the stock market goes down roughly half the time daily.
• 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 matters to your financial success.
I wish you a prosperous, fulfilling, and happy 2025. Thank you for allowing me to be your trusted partner along the journey.
Stay Relentless,
Scott
©The Behavioral Finance Network