The silly season of investment predictions is still upon us. The newsstand at the San Francisco airport on Friday was crowded with crystal balls: Money's Investors Guide 2010, Business Week's "Buy, Sell, Pray" cover, and Barron's annual round table of prognosticators (subscription). But this year my favorite example of the genre that Jane Bryant Quinn calls "investing porn" is the lead story of Fortune's Investing section: "What's Ahead in the Next Decade."
Wow! What publication could possibly do its readers a better service than to tell them what investments will do best for the whole decade? Of course, it's not easy to do, the writer humbly admits, pointing out that most forecasts lined up squarely behind tech stocks at the beginning of 2000. (Uh, shouldn't that be a warning?) But plunging ahead anyway, the article consults Rob Arnott, Bill Gross, Jeremy Grantham and Jeremy Siegel. In all seriousness, you couldn't find a more impressive quartet of market seers.
Still, the crystal quickly gets smudged. The wise men can't agree on anything, especially the outlook for emerging markets, the tech stocks of this decade. Gross thinks China is the future, but Arnott warns probably not the near future, and Grantham thinks it may be the near future but probably not the intermediate future. And Siegel thinks it's the future but only if you don't invest in it directly. Got that?
It's also curious that none of them, as edited by Fortune, even hints at what strikes me as the absolute safest prediction about the next 10 years: Namely, that something unforeseen will happen between now and 2020 to render anything said today utterly irrelevant.
And the problem with these prediction stories isn't just that the predictions are likely to be wrong--though they are. It's also the impracticality of following the advice. You certainly can't follow all four; they contradict one another. And while you could follow one, you have no idea which is right.
But suppose you did somehow latch on to the eventual winner. Without a doubt, even that perfectly foresighted guru would look flat wrong more than once between now and 2020. Would you have so much faith in his 2010 predictions that you'd stick with them for the whole 10 years? For that matter, would he?
I don't mean to pick on Fortune. Everybody does it. In fairness, we at MoneyWatch also sometimes succumb to the temptation to consult fortune tellers. (Though columnists like Nathan Hale, Larry Swedroe and Allan Roth correct us when we do.) Having some confident person articulate a plausible scenario gives you the illusion you know what's coming and that you have some control over your destiny. We humans hate randomness, and pretending that you (or someone whose opinion appears in Fortune or on CNBC) knows the future is an irresistible urge--as normal as wishing you were a superhero as a kid. Unfortunately, it's just as much make believe.
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