Relying on Predictions is Hazardous to Your Financial Future
I spend the majority of this show outlining why prognostications and market predictions are not to be relied on when planning your investment decisions. By definition, the future is something that is unknown. No matter how authoritative or convincing the prediction, it still is nothing more than an educated guess. And even if someone is able to predict a future event, there is the little problem of not knowing how financial markets will react to the event.
Remember that financial markets represent all of the known information available to market participants. The current price of any security reflects all of this information, plus the expectations of all market participants. Financial markets are dynamic and ever changing based on new information and revised expectations of every market participant. The likelihood of anyone correctly anticipating the future and to know how everyone will react to this new information is very, very unlikely. In my opinion, it is much better to focus on those things you can control in order to exert a positive influence on your investment experience. Leave the predictions for your college basketball brackets or Super Bowl champion guesses.
In the final segment, I cover a column recently written by Chuck Jaffe. The focus of the column is the cost of conflicted advice. This is a continuation of the fiduciary wars theme from my previous show (3/22/2015). The Federal Government came out with a report on the cost of conflicted advice. The numbers are staggering and critics are attacking the accuracy of the report. My thoughts on it are this, don’t quibble on a few billion here or there. Realize the number is in the billions annually and that is a shame!
I hope you enjoy the program…