The Trouble With Predictions

 | Dec 31, 2012 | 1:00 PM EST  | Comments
  • Comment
  • Print Print
  • Print

It is that time again when we are bombarded with predictions about what is going to happen in the year ahead. I can understand why the media promote this activity. It is good content at a generally slow time of the year. It can also sound quite profound and insightful as the experts tick off a long list of reasons to justify their clairvoyance.

The only problem is that it won't make you any money. No one, and I mean no one, has been able to consistently predict what the market will do in the year ahead. Of course, there is always someone who is lucky and comes up with a pretty good guess, but they have about the same degree of expertise as someone who picks Lotto numbers.

Even if they do nail the close a year from now, it is the manner in which we make it there that will make you money. It is calling the twists and turns during the course of the year that is going to determine the profits you make.

I'll be so bold to take make this prediction: Over the next year, the market will see at least three good tradable rallies and two ugly downtrends. I also predict that if you are a disciplined trader, you can make money no matter what level the indices close at in a year.

I'm always excited to start trading in the new year, and I intentionally cultivate a mindset of not knowing what will happen. I don't want to have any biases or inclinations. I just want to react as the action unfolds.

You don't need predictions to make money. In fact, you are probably better off without them.

Columnist Conversations

I am shocked that you dont see the 2011 "playbook" as I would think you would have a 2011 bias as your beloved...
Getting a nice pop on Twitter this am with their just announced high end of previous range on revenue and ebit...
(I sound like Dougie with that title!) I'll go with the 2011 playbook if the Cardinals can win the World Serie...
I am not a fan of the 2011 playbook. I have stated it over and over again. The only reason I have used that ch...



News Breaks

Powered by


Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.