How many forecasts have you read or heard about that turned out to be inaccurate and untrue?
This, interestingly, doesn’t take away the authority or hype that surrounds the forecasts in any segment – economic, weather, stock market, politics or more. We’ll continue having forecasts as a part of our mainstream conversation.
However, it does make one thing exceptionally clear: we should read more history and fewer forecasts.
And this is something the successful investors have long understood and deployed. Not that they don’t rely on advanced tools for predictive analysis, which itself depends on past records, they prioritize history in all its facts and emotions that big data often misses or under-prioritizes.
The stock market is exceptionally dynamic. There’s a reason why it’s almost impossible (and naïve) to time the trades. There’s a reason why even with all the AI tools, the market remains uncertain for the ecstatic players who are in the game short-term for money.
We see so many stock market and economic forecasts. The current one states that the economy will continue booming and growing. The history paints a whole different picture, stating that a recession is right around the corner. So, with prices of financial assets surging higher, while the forecasts might give a green signal to the investors to pour the money in the market, the history might give it a yellow signal, demanding more caution.
So, if you’re an investor, one of the biggest things you can take from those ultra-successful in the game is, while they do read the forecasts, they care more about the history to course-correct their present.
This is one of the things Gautam Baid talks about in his The Joys of Compounding book.
If you haven’t already given it a read, do it. The Joys of Compounding Amazon is on sale.
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