First published July 18 2014:
This week we reached another new-high milestone for the Dow Jones. Pundits have taken the opportunity to deliver all sorts of forecasts. I’ve read some ranging from a mild pause, to another 2008, to glowing future growth all on the horizon. The best part is all sides have presented their “reasonable” arguments. So who’s right?
First, let’s establish that most pundits are inaccurate at best, regardless of market direction (http://www.cxoadvisory.com/gurus/). A great new book, Clash of the Financial Pundits, highlights the issue. Even well-paid bank analysts aren’t immune from getting things mostly wrong: http://www.economist.com/news/finance-and-economics/21594358-bear-market-or-bull-analysts-give-bad-advice-consistently-wrong.
No one has been able to consistently call the direction of the market. But like ice cream, there’s a flavour of punditry for everyone.
Successful investors instead spend their time buying the right companies, investing in the right strategies. Whatever your outlook happens to be, ignore the pundits, ignore the new highs, and stick to the plan.
Ben Kizemchuk is a Portfolio Manager & Investment Advisor with Altus Securities Inc. in Toronto. He offers financial planning and investment management for high net worth Canadian investors. Ben focuses on high quality investments, the Growth and Income Portfolios, low risk investing, and reducing tax.