Market Predictions Are (Still) Trash

Since Blueprint is an asset manager, financial services dogma says that right now I’m supposed to tell you where the S&P will close in 2022, which asset class will be the top performer, and where Treasuries are headed.

Instead, for two good reasons I’m going to highlight some laughable predictions made by market “experts” over the years. Reason 1: We could all use a little levity right about now. Reason 2: More importantly, these predictions reinforce the truly important point that most market predictions are worthless.

In fact, it was around this time last year that we called out market predictions as trash. This year, we’re doubling down.

The Top 3 Prediction Misses (According to Me)

1.jpgDow Will Hit 100,000 by 2020! Investment strategist Charles W. Kadlec made that prognostication in 1999. I appreciate his optimism, of course. It’s too bad the dot-com bust and Great Recession rained on that parade.

2.jpgThe Internet (And Therefore Related Tech Stocks) Is Played Out! Nobel Prize in Economics winner Paul Krugman called for dramatic slowing of the Internet’s growth in 1998. He said, “By 2005 or so, it will become clear that the Internet’s impact on the economy has been no greater than the fax machine.” I think I hear the laughter from the halls of Facebook, Amazon, and Alphabet as I type this.

3.jpgGoogle Will Be a Disappointment! Former hedge fund manager Whitney Tilson predicted in 2004 that Google, which held its IPO that year, would be “disappointing” to investors. I wonder if the bruises have started healing yet among anyone who heeded that advice and sold.

I don’t mean to throw shade on the three men above. We’re human, so we are all bound to make some pretty awful guesses at one point or another.

What I DO mean to throw shade on is the entire idea of predicting what the market will do. At Blueprint, we think everything about predictions is an absolute waste of time – making them, reading them, but especially making decisions based upon them.

Market Predictions are a Distraction for Financial Advisors

Plainly and simply: Market predictions are a distraction for financial advisors because they do nothing to help you better manage the financial futures of your clients. Instead, we think principles like the following are what should guide advisors in 2022 — and every year, for that matter.

Toilet bowl frogCognitive and emotional bias have a profound impact on investor behavior.
Some advisors, when building or selecting portfolios, focus solely on short-term quantitative risk/return metrics. They have chosen – sometimes unintentionally – to disregard how each holding influences investor behavior.

We think that’s short-sighted because it misses a key consideration: How is your client going to FEEL about each investment’s movements and outcomes in both up and down markets?

Practically speaking, the probability of your client abandoning their financial plan increases every time you have to defend a position and explain why it’s worth holding, or anytime a portfolio is built in a way that runs counter to what the client can “stomach.”

Advisors who build portfolios using what we call “behaviorally friendly” strategies are better equipped to navigate the twists and turns of the market because they’ve already accounted for the cognitive and emotional biases of their clients.

Successful investing is about staying on the path to arrive at the desired destination.
In our view – and probably yours as well – the best way for investors to reach their long-term financial goals is by having a sound plan and sticking to it.

This principle goes hand-in-hand with my comments about behaviorally friendly strategies, but it also speaks to the need for a financial coach who can walk with an investor each step of the way. In short, your clients’ confidence in the plan you create and the investment vehicles you select empowers them to ride through emotionally charged environments, even as others might be jumping ship and jeopardizing their financial futures.

A robust investment strategy will have a plan for dealing with market surprises before they occur, and even if they’ve never happened before.
I am certainly biased (though I would argue my thinking has some data-backed reasoning behind it), but I think the best investment strategy is one that removes human emotion from the investing process. A rules-based, systematic investing process dictates which assets to buy and sell, when to enter and exit, and how much to execute. Simple.

That process will work if the most hyperbolic predictions for 2022 become reality, if this year looks exactly like 2021, if inflation continues, if a recession hits, and in any other scenario you can think of.

That process also means you’ll never hear us having to explain away current Blueprint portfolio positioning with popular cliches like – and I’m sure you’ve heard these before – “But it’s never happened before!” or, “This time is different!” or, “History repeats itself!”

Principles, Not Predictions

At Blueprint, we’re about principles, not predictions. Principles are steadfast. Principles are expectations. Principles are something you can count on. In comparison, predictions are just noise.

If you’d like to discuss our principles and how they might fit into your own practice, please reach out. We’d love to chat.



Blueprint Investment Partners is an investment adviser registered under the Investment Advisers Act of 1940. Registration as an investment adviser does not imply any level of skill or training. The oral and written communications of an adviser provide you with information about which you determine to hire or retain an adviser. For more information please visit and search for our firm name.

Past performance is not indicative of future results. The material above has been provided for informational purposes only and is not intended as legal or investment advice or a recommendation of any particular security or strategy. The investment strategy and themes discussed herein may be unsuitable for investors depending on their specific investment objectives and financial situation.

Information obtained from third-party sources is believed to be reliable though its accuracy is not guaranteed, and Blueprint makes no representation or warranty as to the accuracy or completeness of the information, which should not be used as the basis of any investment decision.

Opinions expressed in this commentary reflect subjective judgments of the author based on conditions at the time of writing and are subject to change without notice.

No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission from Blueprint.

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