Investment Myths & Fantasies

New Year Forecasts

‘Tis the season . . . for new year forecasts. On the economy, the stock market, interest rates, inflation, gas prices, retail sales, unemployment, mid-term elections . . . you name it. But the dirty secret is that these experts’ forecasts are no more accurate than flipping a coin. In fact, as Philip Tetlock’s research has shown, the more eminent the forecaster and the more widely his or her views are disseminated, the less accurate they’re likely to be. Of course, as in any broad sample, some forecasters will be right. And they’ll trumpet this success as if it were […]

Picking Stocks

There’s a vast marketing machine out there, running 24/7, designed to seduce individual investors into believing they can successfully pick stocks. I’m a huge fan of the E*Trade baby—whenever those ads appear I slam the stop button on my dvr (which will be fast forwarding through all the other commercials) and backtrack so I can watch them. And of course E*Trade and its ilk are doing this because a good deal of their revenue comes from stock transactions—the more people trade, the more money they make. So it’s obviously not in their interest to reveal that the vast majority of their customers’ portfolios will […]