Are most annual Investment Outlooks worthless?

Managing money for investors is based on one fundamental notion — predicting the future. And if you think you are good at predictions, you might as well tell people about it.

On this topic, an excellent article has been written questioning if investment outlook commentaries are worthless. To view the full article please click here but in summary the key messages are as follows:

  • Treat the annual investment outlook show mainly as entertainment, although it can give you a good sense of the consensus view and of crowded trades.
  • Listen to the market more — sometimes the market can do a better job than economists and strategists of telling you what is really going on in the economy and asset fundamentals.
  • Valuation matters a lot, but mostly only for the long term.
  • Wait for high conviction investment ideas and don’t expect them to come frequently or easily.
  • Given the uncertainty confronting us, sensible diversification always makes sense.
  • “I don’t know” is sometimes the right answer, especially about the short term.

I have posted this article with permission from PortfolioConstruction.com.au. While this site is aimed at professional investors, it is still interesting and applicable to personal investors who can gain free access via this link.