This is the time of year when we think about predictions for the market in the New Year. What's it going to do this year?
- Is the market going to do really well because it was so bad last year?
- Is the market going to continue in a downward direction because of everything going on in the world?
I DON’T KNOW. NO ONE KNOWS!!!!
Let’s look at pure facts: Based on Mark Hulbert’s* research, he says that the Dow Jones Industrial Average has roughly a 62% chance or probability of being positive in any given year irrespective of the performance of the prior year. Meaning there is no change in probability of 2019 outcome based upon the fact that 2018 was negative (no change in probability if it had been positive year either).
Yet, I will make a forecast for 2019 (I dare you to compare it to my forecast email for 2018).
- The economy/market will do something that surprises us
- Investors who watch the market often will experience more stress and greater unhappiness than those that don’t
- No one will be able to predict what will happen, but it will all seem obvious in hindsight
- You will be tempted to abandon your plan at some point based on expert forecasts and/or short-term market performance
- Investors that focus on those things they can control (i.e. your reaction) will have a better investment experience than those that focus on what they can’t control nor predict (i.e. a pundits predictions?)
- Investors who abandon their plan to chase a “winning investment” or “sure thing” will have lower long-term returns than investors who stick with their plan
I wish you all a prosperous, abundant and fulfilling Happy New Year! Thank you for allowing me to be a trusted partner along your journey.
*Mark Hulbert Founder of the Hulbert Financial Digest and senior columnist for MarketWatch. Dow Jones Industrial Average (DJIA) is an index that represents a small part of the stock market. One can’t invest in the DJIA.
All investing involves risk, including the possible loss of principal. There is no assurance that any investment strategy will be successful.