Ignore the Mystic Megs of the stock market.
Equity analysts and fairground astrologers have one thing in common, they both earn their living by predicting the future. Cross their palms with silver, and they will confidently tell your fortune.
But fairground astrologists are wiser than stock analysts, because they couch their predictions in the most ambiguous terms, which makes it much easier to claim they were right later. Fund analysts are much more cavalier.
No gypsy fortune teller would be rash enough to predict that on 31 December 2010 you will fall in love with a man called Iain who has short black hair and measures six foot one. Instead they mutter some vague nonsense about meeting a tall dark stranger, and leave you to fill in the details.
Equity strategists are much more obliging. They will boldly tell you exactly where stock markets will stand on a fixed future date. This would be fine if they had uncannily accurate powers of foresight, but they can no more predict the future than Mystic Meg.
That doesn't stop them from trying.
Hoodoo economics
Every week, highly intelligent and pleasantly enumerated equity oracles gaze into their crystal balls and inform the world exactly what will happen to stock markets next month, year or even decade. In fact, the longer the timescale, the more confident their predictions.
It's an absolutely crazy thing to do, but there's no stopping them. Perhaps because it is usually people like me, financial journalists, who are egging them on.
Here's a great recent example, featuring ING senior equity soothsayer Patrick Moonen. He has a crystal ball and he isn't afraid to use it. It also delivers quite astonishingly detailed predictions. No "tall dark stranger" nonsense here.
Moonen has just tipped emerging markets to grow by 25% next year, with Europe just behind at 23%. He forecasts that the UK will return 17%, Japan will grow 9% and the US will bring up the rear with 6%.
He also predicts the new global sector leaders will be healthcare and telecoms, because they currently display the most attractive valuations.
If Mystic Moonen was predicting your fortunes in love, he wouldn't stop at name, hair colour and height, he would fill you in on shoe size, bathroom habits and how long the relationship would last, to the day.
Diviner comedy
To be fair to Mr Moonen, he had a conference audience to entertain, and it sounds like he did the job. I'd much rather have precise predictions to argue or agree with than wishy-washy generalities. And scores of analysts are doing pretty much the same thing every day.
But on any rational level, it is a crazy thing to do, for reasons former Prime Minister Harold Macmillan would have understood: "Events, dear boy. Events."
Shortly after Moonen sat down the world started panicking about Dubai, and UK and European markets fell 3% in an afternoon. Did he know that was going to happen? Did he factor that it into his predictions?
Nobody knows how Dubai going to play out over the next few days, let alone the next year and a bit, and that's only one among scores of blue-sky events that might shake the world.
Loony runes
There is a huge and hungry market for this kind of prediction, and it isn't difficult to see why. Like a good movie, everybody wants to know what happens next. Even more so, since we have a lot of money riding on the outcome.
If Anthony Bolton at Fidelity thinks China is at the start of a bull run rather than the end of an asset bubble, of course we want to know.
If Bill Mott at Psigma thinks the UK market rally has gone too far, too quickly, that's well worth hearing.
But should you put your faith in their predictions? Absolutely not. Chinese stock markets could end next year 50% lower or 50% higher. The FTSE 100 could hit 6,000 or 4,000 at any point in 2010. No fund manager can predict what will happen, no computer can model it.
As the song says, the future is not ours to see, what will be will be.
Seer suckers
As the year draws to a close, we are heading into peak season for this type of thing. A lot of very clever equity clairvoyants will pore over the tea leaves or animal entrails and predict how markets will go over the next 12 months, and will all come to entirely different conclusions.
Like most investors, I enjoy reading these predictions. They're interesting and entertaining, and almost every single one of them will be wrong.
Even if they are spectacularly wrong, they will make similarly reckless predictions next year. And quite right too. It's a branch of the entertainment industry.
You will enjoy a great fortune
Everybody wants to know the future, but sorry, you can't. Instead, you have to focus on the things you can do, such as building a balanced portfolio of attractively valued companies that should deliver attractive long-term returns regardless of what happens over the unpredictable short-term.
If you do that, I predict a wealthy future for you.
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