Security is mostly a superstition. It does not exist in nature, nor do the children of men as a whole experience it. Avoiding danger is no safer in the long run than outright exposure. The fearful are caught as often as the bold. Faith alone defends.
Helen Keller
Helen Keller was an inspiration to many during and after her life. Her life reminds me that while our brains may be filled with gray matter, we all struggle in dealing with gray areas, or areas of uncertainty. We prefer the known to the unknown and associate uncertainty with danger. These preferences greatly complicate our job as investors because there are few arenas in life where we encounter more uncertainties than in the economies and financial markets of the world. One word of caution – our innate desire for the perceived safety that we believe accompanies certainty leaves us prone to fall for the illusion of certainty. The reason market and economic forecasts are so popular, is they often provide us with the illusion of certainty.
As much as we wish it weren’t the case, the markets are fundamentally unpredictable. This reality is evidenced by the fact that no one can consistently predict them with any measure of accuracy. Of course, any given forecast will end up correct from time to time; even a stopped clock is right twice a day. But market and economic forecasts are not reliable prognosticators – no matter how much we wish they were!
So are you ready to hear my forecast? Unlike other economic forecasts, my forecast is both robust and reliable because it is grounded in enduring investment truths and based on the realities of investor behavior.
My Forecast For 2024
In full disclosure, the following forecast is nearly identical to my forecast from last year (and years prior to that as well).
- The economy/market will do something that surprises us (and surprises the “experts”)
- The financial media will profit off the average investor by emotionalizing headlines and short-term market moves to entice you to click/tune in to their publication.
- Investors who watch the financial news and follow the stock market closely will experience more stress than those that do not.
- Investors who choose to move to cash, waiting for a “better time” to invest, will suffer significant uncertainty and anxiety about when and how to get back in.
- Your investment decisions and reactions to market events will have a significant impact on your personal investment return.
- You will be tempted to change your investment strategy based on short-term market performance, “expert” forecasts, and/or your own personal beliefs about the future.
Conviction, patience, and discipline are virtues every investor should develop. Although these characteristics are not easy to foster, they are essential to your success. As your advisor, one of my most important roles is helping you ignore the noise and focus on what really matters to your future financial security. I wish you a prosperous, fulfilling, and happy 2024. Thank you for allowing me to be your trusted partner along the journey.
-Dan
©2024 The Behavioral Finance Network
