Although it’s April Fool’s Day, this post is not a joke. My favorite mutual fund company Vanguard started a blog at vanguardblog.com. A team of five investment and communication professionals write for the blog. I have high hopes for it but I wish it were better. In one article, Forecasts and second marriages, Craig Stock told us
"The lesson for investors, I think, is to assume that forecasts — no matter the source — are likely to be wrong."
The implied message is don’t listen to pessimistic forecasts. In another article, The deal of a lifetime?, John Ameriks said
"At the risk of giving away my age, I’ll tell you that that suggests buying stocks right now could be the deal of my lifetime."
Forecasts are likely to be wrong. I know that. It applies to both bullish and bearish forecasts. Forecasts are also likely to be right. How likely and which forecasts are the questions. Buying stocks right now could be the deal of a lifetime. Yeah, it could be. It could also lead to a number of other scenarios. It either *is* a deal of a lifetime or it isn’t. If you don’t know, say you don’t know.
What exactly do you do with something that could be the deal of a lifetime, knowing that forecasts are likely to be wrong? Nothing. They are just wasting your time. It’s unfortunate one cannot expect true opinions and analysis from a corporate blog.
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Something I always find amusing is to read a mutual fund manager’s forecast for the coming year and then compare it to a horoscope reading. While they tend to talk about different subjects, the format is always the same. There are just enough positive and negative predictions to make the predictions at least partially correct. It sounds like the Vanguard experts are doing the same thing.
In fairness, I would expect that a lot of this is due to lawyers. If a Vanguard guy comes out and says this is the best time to buy stocks, but the market goes down another 50%, someone could file a lawsuit.