Forecasting is for Fools

The business news networks are full of so-called experts who attempt to forecast the markets. As John Kenneth Galbraith once said: “When it comes to the stock market, there are two kinds of investors: those who do not know where it is going and those who do not know that they do not know where it is going.” For example, the August 14, 2000 issue of Fortune magazine had an article called “10 Stocks to Last the Decade.”* See the list below and how the stocks did.

Basically over a 74% loss in the portfolio with three bankruptcies and not a single winner. This is why we use our rules-based trend-following system known as WealthProtect**. While no strategy can assure success or protect against a loss, we believe trend-following works better than forecasting or just holding on throughout a bear market. See our recent White Paper on Trend Following.

*Morris, Gregory L., Investing with the Trend, Bloomberg Press, 2014, pp 58-59. **The Armstrong Wealth Management Group WealthProtect System is an investment risk control system designed (but not guaranteed) to limit significant losses in major bear markets (excess of 30% loss from market peak to market trough). It is NOT designed to prevent normal market losses (under 20%). No strategy can assure a profit or protect from a loss. Occasional false signals can reduce returns.