Apprenticed Investor: The Folly of Forecasting
This column warns investors to be wary of what they read and hear in the Financial Press.
Here's the ubiquitous excerpt:
There are a few things that investors should keep in mind when encountering these speculations. Whenever you find yourself reading (or watching) someone who tells you where a stock or the markets are going, consider these factors:
· No one truly knows what tomorrow will bring. Nobody. Any and all forecasts are, at best, educated guesses.
· All prognostications are instantly stale, subject to further revision. Conditions change, new data are released, events unfold. Yesterday's prediction can be undone by tomorrow's press release.
· In order to "become right," some investors will stand by their predictions despite a stock or the market going the opposite way, hoping to be proven correct. Ned Davis called this the curse of "being right rather than making money."
Prior columns can be found here.
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