The Trouble With Predictions

 | Dec 31, 2012 | 1:00 PM EST
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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.

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