Odds Are You Suck at Predicting, So Stop
Now that we have your attention, let’s spend the next 90 seconds together helping you become a better investor:
- In August 2019, what did you expect to occur in the economy and financial markets in 2020? You would be lying if you said risk assets would suffer their deepest crash since 2008 amid a global pandemic, only to recover sharply because of record fiscal and monetary stimulus.
- In August of 2020, what did you expect to occur in the economy and financial markets in 2021? You would be lying if you said the US economy and risk assets would BOOM due to the combination of vaccine proliferation and record fiscal and monetary stimulus.
- In August of 2021, what did you expect to occur in the economy and financial markets in 2022? You would be lying if you said the Fed would tighten monetary policy at the fastest pace in 40 years amid a 40-year high in inflation.
- In August of 2022, what did you expect to occur in the economy and financial markets in 2023? You would be lying if you said both the US economy and the stock market would prove to be far more resilient than the bond market.
Stop trying to predict everything and join the systematic investing revolution benefitting thousands of 42 Macro clients worldwide. We do as much fundamental research as any firm on global Wall Street regarding what is likely to happen in financial markets, but we do not let those views influence our investment decisions.
The only information that impacts our portfolio recommendations is A) what is actually happening in the economy (not to be confused with what we expect to happen); and B) how what is actually happening has historically influenced asset market performance. The alternative to our systematic, trend-following approach is blowing up your or your clients’ account(s) thinking you can top and bottom tick asset markets with any consistency.
Our Macro Weather Model is the cutting-edge quantitative tool that 42 Macro clients rely upon to nowcast A and backtest B, in real-time, on a rolling basis:
CLICK HERE to download our full Macro Weather Model slide deck for today, August 25th, 2023.
CLICK HERE to see our Macro Weather Model in action across our various research products.
For those of you that now understand the value of adding a Bayesian research and risk management overlay to your investment process, we look forward to helping you improve both your investment performance and investing acumen.For the rest of you, best of luck with your 2024 predictions! We genuinely hope they aren’t as off target as your Aug-19, Aug-20, Aug-21, and Aug-22 predictions likely were about 2020, 2021, 2022, and 2023. Have a great day!