What The &%#?Forecast!!!

January 7, 2015 - John Osbon (2 mins to read)

Did your investment advisor predict the 50% drop in oil prices in 2014, the surging US economy, the strong dollar and the worldwide decline in interest rates? No? No one else did either. Which begs the question: how is your advisor – and his/her forecasting – working for you? Are you paying a fee for your advisor to guess what will happen next?

The courage to be wrong
All credit to Byron Wien, Blackstone Group vice chairman for bravely publishing his “10 Surprises” list year after year.  As a self-made investor and Wall Street guru you would be hard pressed to find anyone more experienced and articulate on the investment scene. But even with all his access to data and newsmakers, his predictions are more often wrong than right. (See his 2014 report card) If Byron can’t forecast accurately, who can?

Wrong againfuture-crystal-ball
Meredith Whitney became very famous in the investment realm when she was the first to predict Citibank would cut its dividend in 2007, an outrageous suggestion at the time. It turns out she was right, and the media was quick to anoint her the brightest forecaster in the room. But her next big prediction – the collapse of the municipal bond market – was a complete bust. And her one-year-old hedge fund shut down in 2014 after losing 11 percent in an up market. An expensive oops.

The forecast for you: 4 questions
You can’t blame investment pros for trying to predict the future and profit from it. But very few succeed, and even fewer succeed consistently. For you to predict which money manager will make the best prediction (or guess) in a given year is just as sketchy.

We suggest you stay out of the prediction business altogether (like we do) and focus on finding an advisor who can answer these four questions:

  • Why is this investment strategy best for me?
  • How is your firm built for my investment success?
  • How are my goals, dreams, and needs matched with my portfolio?
  • What risks might I be taking with my money and my future that are not obvious?

We plan, we don’t predict
We can’t tell you what will happen with the dollar, oil prices or technology stocks next year. Our portfolio design principles don’t rely on guessing right. Instead, they are centered on you, and reaching your financial and investment goals. If that sounds more like what you expect, let’s get together and talk about how you can reach your goals without predicting an unknowable future.

John Osbon – josbon@osboncapital.com

Weekly Insights

delivered to your inbox


This communication may include forward-looking statements. All statements other than statements of historical fact are forward-looking statements (including words such as “believe,” “estimate,” “anticipate,” “may,” “will,” “should,” and “expect”). Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Various factors could cause actual results or performance to differ materially from those discussed in such forward-looking statements.”

“Historical performance is not indicative of future results. The investment return will fluctuate with market conditions.

Past performance is not indicative of any specific investment or future results. Views regarding the economy, securities markets or other specialized areas, like all predictors of future events, cannot be guaranteed to be accurate and may result in economic loss to the investor.

Investment strategies, philosophies, allocations and holdings are subject to change without prior notice.

This communication is intended to provide general information only and should not be construed as an offer of specifically tailored individualized advice.

While the Adviser believes the outside data sources cited to be credible, it has not independently verified the correctness of any of their inputs or calculations and, therefore, does not warranty the accuracy of any third-party sources or information.

Adviser does not endorse the statements, services or performance of any third-party vendor.

Unless stated otherwise, any mention of specific securities or investments is for hypothetical and illustrative purposes only. Adviser’s clients may or may not hold the securities discussed in their portfolios. Adviser makes no representations that any of the securities discussed have been or will be profitable.

Any IPO alerts are purely informational and should not be construed as recommendations to invest.

Adviser is not licensed to provide and does not provide legal, tax or accounting advice to clients. Advice of qualified counsel or accountant should be sought to address any specific situation requiring assistance from such licensed individuals.

Any case studies or hypothetical client profiles are for demonstration purposes only. They illustrate the breadth and depth of the many clients we represent at various life stages. Any similarities to actual Adviser’s clients past or present are strictly coincidental. Individual advice and results will vary based on each client’s circumstances, objectives and prevailing economic conditions.

Weekly Articles by Osbon Capital Management: