Predictions and the Human Factor
Rizek Housari, CPA, CFP®
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Predictions. They usually get people very excited or extremely nervous about their money.
It’s not my style. Why?
Let me give you an example.
The big banks, I mean the ones full of the best economists and analysts, gather together to come up with their own “special prediction” of what the market will look like over the next few months or year.
Frankly, they are paid enormous sums of money to make a guess for the short-term future.
Now sometimes they get lucky, and reality comes close to their estimate. But it is not often.
Does the average investor benefit from heeding their unsolicited “advice?” No. The big news networks are the ones who make the real money off these predictions. Why?
Americans tune in to the news in search of financial advice. That is not what the news or social media provides. They are in the business of making money from advertisements.
They are not fiduciaries. They do not discuss the real principles of wealth building, probably because nobody would continually tune in to hear, “This just in: Investing a portion of your income each month continues to be the best way to grow and maintain wealth.” C’mon, that is boring.
But just to show you how the experts have done so far, here are the S&P 500 predictions for 2022:
- BMO Capital Markets: 5,300
- Goldman Sachs: 5,100
- Wells Fargo: 5,100
- JP Morgan: 5,050 (Funny that they break their estimate down to increments of 50 don’t you think.)
At the beginning of the year the index was around 4,800. So the experts were optimistic, to say the least.
As of the publishing of this article, the S&P 500 is around 3,600.
The point is you should invest based on your goals and financial plan, not just based on what someone says online, on the radio, or on tv.
Predictions are fun to discuss for some people, I guess.
Personally, I would rather build a strong financial plan that includes my goals, for my life. Let’s be sure to involve efficient tax planning, estate planning, and proven strategies to get us to where we want to be. Then, we can be confident that whatever comes we have a plan and will be ready. That is the power of financial planning.
Live your life. Markets eventually recover.
Rizek Housari, CPA, CFP®
Source: https://www-forbes-com.cdn.ampproject.org/v/s/www.forbes.com/sites/sergeiklebnikov/2021/12/01/heres-what-wall-streets-biggest-banks-predict-for-stocks-in-2022-and-what-to-watch-for/amp/?amp_js_v=a6&_gsa=1&usqp=mq331AQKKAFQArABIIACAw%3D%3D#aoh=16576764477776&referrer=https%3A%2F%2Fwww.google.com&_tf=From%20%251%24s&share=https%3A%2F%2Fwww.forbes.com%2Fsites%2Fsergeiklebnikov%2F2021%2F12%2F01%2Fheres-what-wall-streets-biggest-banks-predict-for-stocks-in-2022-and-what-to-watch-for%2F
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