Markets are hard.
Predictions about them are harder.
That doesn’t stop firms from putting out forecasts and targets each year.
It is understandable why firms continue this annual exercise — it draws eyeballs and clicks!
In my experience the more pessimistic the forecast, the more traction it gets. Playing into investor fear is one of the easiest ways to draw attention to one’s predictions and boost reach.
I have had numerous clients over the years contact me after reading an article about an impending market crash. One of my favorite exercises is to go back and look at the history of these predictions. More often than not, the same people have been predicting disasters for years.
Continuing to call for a crash until you’re right is of little help to long term investors. Or to quote Morgan Housel, “Optimism sounds like a sales pitch. Pessimism sounds like someone is trying to help you.”
Long-term investors should be cautious about taking action based on disaster predictions. Rather, they should focus their energy on a disciplined long term investment strategy.