Friday, 6 January 2017
The Only Prediction for 2017 You Will Need
It’s that time of the year again. With the start of the new year, financial pundits have taken out their crystal balls and magnifying glasses and are queuing up to give their predictions for 2017 and analysis of 2016. The media have found a lot of content to keep themselves busy. Newspapers are overflowing with graphical stories on the trends for the new year.
Here is the problem: they had done the same thing when 2016 was coming. They kept forecasting throughout 2016. And they were wrong almost always. What really happened was very different from what was forecast—remember Brexit and Trump win or the rally in metal stocks when everyone was so pessimistic about their outlook?
The next “big” event that has got analysts’ and media’s attention is the Union budget. For the next one month, there will be a barrage of what is expected from the budget. News channels will have panels of experts passionately discussing what the budget is going to have. As usual, the reality will turn out to be much different.
The one prediction for 2017 that is useful to the investor is that the experts are going to be wrong yet again. Don’t trust them. Follow your investment strategies and don’t look here and there. Here is another effective tool: don’t discount the power of the non-event. While most experts paint either a flowery or a gloomy picture, the one possibility nobody talks about is “nothing will happen.” Apply this argument to Trump presidency and demonetization after-effects.
The penchant of the pundits to predict the future and go wrong isn’t new, yet the stubbornness to do so doesn’t go. In spite of being proved wrong countless times, they can’t help their urge to forecast. It’s pointless expecting them to shut up. As an investor, it’s your responsibility to insulate yourself from their forecasts. That could be the best new-year resolution you can make.