If you go all the way back to the time just before the 2008 financial crisis, finding predictions by countless experts about where the market was heading was easy. Many of those predictions were bullish, with the experts saying the Dow would go as high as 16,000. Some predicted the market would be flat in the face of weak oil prices and a weak housing market. No one, however, saw the 10% decline that came in the first quarter, or the credit crisis. Today, just as it was back then, many of these experts have no clue where the market will ultimately go.
Listening to the Experts
When it comes to experts who are in the public eye, there’s probably no one more famous than
Jim Cramer. While he seems like a nice enough guy, there’s no denying that the role he plays on Mad Money is a difficult one, and his track record shows it. He didn’t predict the 2000 point drop at the end of 2007. When the market hit 14,000, he was talking up a rally, then he talked about how there was going to be a correction after averages fell — a strategy of buying high and selling low. Does that sound right to you?
He’s only one of many, however. There are a lot of pundits on TV who make predictions. Some say fears of recession are overblown, while others have plenty to say about weak or strong earnings and home prices. Why do they all say different things and, more importantly, who should you be paying attention to?
It doesn’t hurt to at least listen to the experts, as you may get a few ideas about your own portfolio that will help you become a better investor, but I wouldn’t suggest listening to them when the market predictions begin popping up. The markets practically have minds of their own, so no one can say for sure what they’re going to do. You may have experts who know the patterns and fundamentals of movements, but no one has any more clue what will happen any more than the person next to them. At the end of the day, the only real winners that emerge when it comes to predicting markets are the financial networks that make a point of having people with opposite opinions. They get people watching and listening and rake in the advertising dollars.
If you have any questions about investing and anything else related to your finances, feel free to get in touch with me and let me know how I can help.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful. All investing involves risk including loss of principal.