Any investment strategy that requires an accurate prediction of the future is doomed to failure. Investors must be aware that no matter what the financial institutions say in TV commercials or other financial media no one can predict the future consiitently. There is no evidence that marketing timing, stock picking or track record investing work. Work with an advisor who develops a prudent strategy for you and keeps you disciplined to that strategy. This will drastically improve your opportunity for success.
Given this background, I read with interest Biggs’ views on those who attempt to predict the future of the market. They are set forth in his 2009 book, Wealth, War & Wisdom.Biggs noted the “increasing evidence” that relying on expert opinion for advice is “a loser’s game.” He set forth with approval studies showing expert opinions on various subjects, including business, should be ignored “as random blather.” He correctly observed “… that pundits who appear regularly on television are particularly unreliable… because they become obsessed with showmanship.” Their focus is not on accuracy but “on their entertainment shock value.”
He is, in my view, spot on with these observations, although I suspect Jim Cramer might take issue with them. Yet, there is an irony that a “premier prognosticator”, who runs a hedge fund, would caution investors to ignore those who purport to have the ability to predict the twists and turns of the market.
Maybe the final phase of his evolving views will be a recognition that trying to beat the market is also a loser’s game. The main beneficiaries of actively managed mutual and hedge funds are typically those who run them. Those who invest in them are often not so fortunate.
The financial services institutions spends millions every year convincing you that they can predict the future. This is more evidence that they cannot. Your ability to proper allocate your assets and remain disciplined to your strategy will determine your success.
Please comment or call to discuss how this affects you and your portfolio.
- The hedge fund fraud is in the residuals (xenomorph.typepad.com)
- Investors still have options, experts say (mercurynews.com)