A safe bet: predictions about the market will be wrong
“These annual documents are generally a good, tangible reminder that we are hopeless at forecasting and that financial markets are always a rotating cast of salient topics that feel urgent in the moment but have little predictable bearing on long-term outcomes....
“If read for what they are — a gentle sales pitch with some interesting financial market observations—they are harmless enough, particularly if they, somewhat inadvertently, encourage readers to stay invested over the long-term. But we certainly don’t need to be acting on them and rest assured nobody will remember anything that is being foretold now in 12 months’ time.”
– Joe Wiggins, author of The Intelligent Fund Investor, in a 12/10/24 post on his Behavioral Investment blog. He said the future is unknowable, which should be kept in mind by anyone who reads market predictions. Read more at bit.ly/41tvdC7.
A timeless lesson
“The concept is simple: don’t put all your eggs in one basket. By combining assets with different fundamental drivers you can achieve lower volatility, better risk-adjusted returns, and increase your odds of sticking with a portfolio over time. So what could be difficult about that? If you have a diversified portfolio, you’re always going to own something that’s underperforming and you’ll never be concentrated in the top performing asset class of the moment.”
– Financial analyst Charlie Bilello, in a 12/10/24 blog post about investing lessons from 2024. One of those lessons has stood the test of time: it’s wise to diversify. Read more at bit.ly/3DipRiU.
The trend is your friend
“The trend in the market is a lot like the weather; it is what it is and there’s not much anyone can do to change it. Or, as Mark Twain once said, ‘Everybody talks about the weather, but no one does anything about it.’ So, if the weather looks like rain, you wear a raincoat or carry an umbrella, whether you like it or not.... You either go with the trend, or you suffer the probable losses in trying to buck the trend.”
– Stanley Kroll, an author and well-known commodities trader in the 1970s, quoted in a 12/5/24 post on The Macro Tourist blog. Read more at bit.ly/41y5KY9.
