Useless predictions

by gbsmith4

It’s about that time of year where financial pundits start making predictions about 2012.  Trust me, I know I’ll have my turn in a week or so on TV.

In general, though, I think long term predictions about the market are useless.  In fact, maybe they’re worse, because if you invest or trade around them, you could lose some serious money.

My strategy has always been to fall into one of two camps: either the very long term, or the very short term.  For the former, I’m always optimistic.  I buy companies I like when they fall, and then sell them when they rebound.  Pretty simple and if you have patience, almost always a winner.

For the short term — and here I’m talking no more than a few weeks — I’m strictly a momentum player.  If the market is trending down, I try to be short. If up, then long.  But even then, I have a number of money management techniques to get me out if/when I’m wrong.  And I’m wrong a lot.

I guess if pressed, I’d always say the next 12 months are going to be great.  I mean geez, who knows, and if given a choice, who wants to be Debbie Downbeat thinking things will get worse?  Sure, you sound really smart pointing out all the pitfalls, but folks like that always strike me as being pretty depressing, and we all have enough in our lives to worry about other than some guru saying the Apocalypse is near.

Especially when most of the time they’re dead wrong.