Market Predictions and Reality
Every year, near the end of December, many market predictions are made. Experts say what will happen in the next year and how much the market may go up. A comparison of predictions and real market moves in the US shows a clear picture. Similar things also happen in India. Many experts come every year and talk about the future of the market. But when we look at real data from the last 25 years, the story is very different.
Always Positive Predictions
In the data of the last 25 years for the US market, one strange thing stands out. There was not a single year where experts clearly said the market would fall. Every year, the average view was that the market would go up. Even when markets were near big trouble, the predictions still stayed positive. This shows that market views are often hopeful, not realistic.
When Predictions Failed Badly
There were many years where predictions were totally wrong. In 2000, 2001, and 2002, experts expected strong growth, but the market stayed down in all three years. In 2007 and 2008, again the market was expected to be positive. One year stayed flat, and the next year the market fell by almost 40%. These are clear examples of how risky it is to trust yearly forecasts.
Markets Also Surprise on the Upside
Wrong predictions do not only happen when markets fall. Many times, markets do much better than expected. In some years, the market was expected to grow only 6–7%, but it actually went up by 20%. Even in recent years, expectations were low, but markets performed much better. This proves that markets can surprise in both directions.
Why Predictions Do Not Work
In reality, no one can correctly guess what the market will do every year. Sometimes, out of many people guessing, a few will be right by chance. This is like saying a broken clock is right two times a day. Running after predictions is mostly a waste of time and can put your money at risk.
A Better Way to Invest
Instead of following predictions, it is better to follow a clear plan and stick to it. Keep your money spread across different asset types so you are not fully dependent on one area. Stay away from daily market noise and TV predictions. By doing this, your investment results can improve over time, especially in the long run.
