Market Predictions Make as Much Sense as '6-7'

If there’s one universal truth in investing, it’s this: nobody actually knows what’s going to happen next. That doesn’t stop Wall Street, the media, or your neighbor with the new day-trading setup from trying. In our view, it’s a whole lot of “6-7,” as the kids are saying these days.

In reality, financial markets have a special talent for humbling forecasters — often spectacularly.

Hollywood, oddly enough, understands this better than most economists. Consider “Back to the Future Part II”, where Doc Brown warns Marty about the dangers of knowing too much about the future. If Doc had ever seen analysts revise S&P 500 year-end targets for the tenth time in a year, he might’ve added, “Whatever you do, don’t publish a prediction — because the future is going to rewrite it immediately!”

Predictions can give us comfort. They offer the illusion that uncertainty can be tamed, measured, packaged, and presented as a tidy number, such as: “The market will be up 8% next year.”

But markets don’t operate on tidy numbers. They tend to operate in unexpected ways due to human behavior, randomness, policy decisions, innovation cycles, geopolitics, sentiment, liquidity, and sometimes just plain weirdness.

Markets Are ‘Like a Box of Chocolates’…They Might Melt

As made famous in the “Forrest Gump” movie: “Life is like a box of chocolates, you never know what you’re gonna get.” Had Forrest been a portfolio manager, he might’ve added: “And sometimes the chocolates melt, re-harden, and come back as something called AI-themed small-cap industrials.”

We laugh, but this is the essence of markets. They are complex, adaptive systems that make fools of forecasters.

Every year strategists confidently issue price targets. Every year those targets drift farther from reality than the plot of “Hot Tub Time Machine.” And yet — every year — people come back to hear the latest round of prognostication.

Take 2020. Or 2022. Or honestly, pick any year ending in any number. Markets rarely follow the story we write for them. They are more like the iconic “The Princess Bride” line: “You keep using that word. I do not think it means what you think it means.” Replace “word” with “forecast,” and you have modern market commentary.

‘Who You Gonna Call?’

But the futility of prediction doesn’t mean you should give up on investing. Far from it. It simply means you should give up on prediction as a strategy.

Some of the most successful investors don’t attempt to predict short-term outcomes. They prepare for ranges of outcomes. They build resilient portfolios. They rely on process over prediction. They manage behavior. They stay invested when it feels uncomfortable. They avoid the seduction of perfect foresight.

Perfect foresight doesn’t exist — unless, of course, you’re the kid in “The Sixth Sense,” who famously said, “I see dead people.” That’s still more realistic than, “I see next quarter’s CPI.”

Predictions often fail because humans crave certainty in an uncertain environment. We’re not wired to accept randomness. We want narratives. We want explanations. We want patterns.

In “Ghostbusters,” when asked about the supernatural events unfolding around them, Dr. Peter Venkman shrugs and says, “It’s more of a guideline than a rule.” That’s how economic models work. Helpful? Yes. Accurate? Sometimes. Precise? Almost never.

Be ‘Prepared for All Monetary Possibilities’

So how should financial advisors approach this topic with their clients?

We suggest emphasizing principles that have stood the test of time:

• Long-term planning wins over short-term guessing.
• Investing process should be the focus.
• Discipline beats prediction.
• Diversification works.
• Time in the market beats timing the market.

While prediction is futile, Doc Brown was right about being “prepared for all monetary possibilities” in “Back to the Future Part II.” Preparation is powerful.

When the future arrives — and it always does — it almost never lines up with the consensus view. And that’s okay. Markets reward patience, discipline, and adaptability far more than clairvoyance.

Here’s a final quote, this time “Ferris Bueller’s Day Off,” that we think relates here: “Life moves pretty fast.” So do markets. If you spend your time trying to predict every twist and turn, you’ll miss the bigger picture: long-term growth happens despite endless short-term uncertainty.

In the end, the best investors aren’t the best predictors. They’re the best reactors. They are thoughtful, balanced, emotionally steady participants in a system built on uncertainty. And that’s a future you can count on.