When there’s a lot of uncertainty in the world, many investors and traders become anxious and and turn to market prophets for words of wisdom. This is a natural reaction, but it’s not a helpful one. Nobody – no matter how successful they are or how long they’ve been trading – knows what the final outcome will be.
Right now, we’re facing two major uncertainties: the upcoming election (and a likely win by Hillary Clinton) and a possible change in Fed policy (are we looking at a December rate hike?). No matter how nervous you might feel, here’s why you should ignore the market prophets:
Market prophets don’t exist
I heard someone claim to be “The Prophet,” which I found quite amusing. First of all, there’s no such thing as a market prophet – no one can see the future. Second of all, most market predictions never come to pass. If you hear someone claim they’re a prophet, run in the other direction. They’re just a 21st century snake oil salesman.
Their motivation is always suspect
It would be so nice to follow the lead of someone who has been through similar situations and can offer historical perspective, but I have trouble trusting market experts. I don’t know the person’s true motivation. Is she offering advice just for publicity? Does he have a new book out?
Ratings trump accuracy
The business media are looking for eyeballs to boost ratings, so you can almost never trust what the talking heads are saying. Recently, I heard veiled warnings about a pending doom and gloom scenario, with some even suggesting that it was time to get out of the market. These statements were purely opinions and not based on any evidence. But if you had listened? There goes your portfolio, up in smoke.
The market will always tell the truth
Ignore the market prophets, talking heads and media in general. Watch the charts and market signals instead. If the market shows signs of cracking, you’ll see it.
Copyright: BDS / 123RF Stock Photo
