About Economic and Financial Predictions
·
About economic and financial predictions:
a. When
it comes to financial prediction, the more widely followed and credible the
source, the more skeptical we should all be about the information.
b. Many
who try to read the economic tea leaves in the hopes of gaining an investment
advantage have a miserable track record.
c. Although
we don’t want to ignore forecast, we must try to find out what we (and the
market) don’t know, at least not yet, and take action before others do.
d. Many
analysts wait for a stock to go down before downgrading it and for it to go up
before they issue a ‘buy’ alert. They wait for confirmation, which is too late
to do investors any good. The analysts are using information that is already
reflected in the stock price to make their forecasts.
e. Analysts
also tend to look at the industry outlook in which a company operates in
preparation of the stock forecasts. Unfortunately, anticipated industry trends
don’t always pan out, and investors who rely too heavily on such forecasts can
be left holding the bag.
·
Step back from the circumstances of the moments
and access the events around you with a sense of detachment – keep the reality of market and business cycles in
mind, look to the future, and try to anticipate what is coming next.
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