2025’s Stock Market is Showing the Danger in Predictions

“The forecasts may tell you a great deal about the forecaster; they tell you nothing about the future.” This classic line from Warren Buffett constantly reverberates through the minds of the team at Blueprint Investment Partners, and it has reached a crescendo during this turbulent start to 2025.

My colleague, Mike Carlone, summarizes that same Buffett quote this way: Predictions can be dangerous. You can read his take in a 2022 blog post titled, “Why Predictions Are More Dangerous Than Guesses.” Though it is three years since he wrote it, recent times show the warning is just as important as ever: When investors base their financial decisions on the predictions of “experts,” they put roots into sandy ground because analysts and economists actually have no idea what is going to happen. The future is unknowable!

The Future is Unknowable – Case In Point

Just 6 short months ago, in December, the S&P 500 Index was making new highs and international stocks were getting crushed by their U.S. counterparts at a historic margin. Within 100 days, the benchmark large-cap index met the mainstream definition of a bear market by falling more than 20% from its previous high. Further, stocks abroad – particularly those of developed countries – flipped the script and enjoyed a strong start to the year in the midst of the domestic decline.

In recent weeks, U.S. stocks are once again climbing but are still approximately 5% from the most recent high. Flat for the year, there is much ground to be made up to reach the 2025 forecasts hypothesized by pundits.

Prioritize Process, Not Prediction

For many mainstream investors, it has likely been a nerve-wracking year thus far, causing them to long for the steady trends of 2024. For systematic investing managers like Blueprint Investment Partners, we also miss those low volatility periods, but we expect and therefore design our strategies to be prepared for all scenarios: those that look like 2024, the first half of 2025, and whatever is to come.

Thus, it is business as usual for us…follow the plan and keep our partnering financial advisors on target to help their clients reach their long-term goals.