Making Predictions

It's tough to make predictions, especially about the future; and if your investment approach relies on making predictions, then your returns are only as good as your forecasts. I'd throw in timing as well. History shows that's a tough way to make a buck. The so-called 'experts' get it right less than 1-in-3, and we all underestimate the impact of outliers, or extreme events that few predict. If you predicted the market perfectly from 2003 to 2008, it would have been for nothing if you failed to predict the subsequent sell-off.

Listen to the experts, because you can learn a lot from their knowledge about what they specialize in; however, be wary of their predictions because by specializing in one field, experts may overlook exogenous factors.

GB