Let me let you in on a little secret: In addition to my undefeated track record of buying stocks when they are on sale, I can lay claim to another title…
I am the greatest forecaster in the history of the stock market.
For more than a decade, in early December each year, I have issued a stock market forecast for the 12 months ahead. I've been eerily accurate, if I do say so myself, and every year the markets have done precisely as I predicted.
I have never even been close to wrong. When I look at the calendar, I see that it is, indeed, December – and time for me to issue my forecast for 2019 that I am highly confident will come just as true as all the others.
Ready? Let's go…
I Don't Even Need a Crystal Ball for This
In 2019, the stock market will be open Monday through Friday from 9:30 to 4:00. There will be exceptions, of course – holidays, and the occasional day of national mourning like we just saw in honor of U.S. President George H.W. Bush.
When the markets are open, prices will fluctuate. Sometimes that fluctuation will be violent in nature, and other days it will be relatively calm.
Rather than admit they have no idea why prices are moving one way or another, pundits will appear on TV to announce that said fluctuations were caused by the Fed, the president, geopolitical events, or any other plausible explanation they can shoehorn into the facts.
There will be surprising events that provoke positive responses from traders; this will cause stocks to rally higher. There will be surprise bummers that send stocks lower for a while.
We're guaranteed to see at least a few hedge funds make spectacularly stupid moves that force them to close. Rock-star investors will leave Goldman Sachs Group Inc. (NYSE: GS) and other big banks to go into business for themselves, so they can charge the "two and twenty" management and incentive fees. Some of these folks will pull stupid moves of their own and be forced to close. Fortunately for these dummies, the "two and twenty" isn't refundable.
Some companies will get taken over. Some will go bankrupt. At some point in 2019, there will be another "next big thing" announcement from someone in a really nice suit with a confident smile.
I can say with a high degree of confidence that the stock market will close 2019 at precisely 4 p.m. Eastern Standard Time on Tuesday, Dec. 31, 2019.
There you have it: My 2019 prediction is pretty much guaranteed to come true… unless something drastic occurs that causes the markets to close early on New Year's Eve of next year.
To my amazement, my flawless track record has yet to be recognized by Wall Street. I have yet to be given my own forecasters' mutual fund. Hopeful investors have yet to experience the joy of stuffing millions of dollars in "two and twenty" fees into my pocket as I make great call after great call.
Like so many unrecognized greats of the past, I've never even gotten a dinner.
Making Accurate Predictions Is Harder Than Cable TV Lets On
I've been doing this stock thing for a long time now, and I can tell you that no one can predict the stock market. People can make educated guesses. They can apply their experience, consider the data, the history, and the current state of the world and tell you, in all intellectual honesty, what they think is going to happen. But predict it, they can't.
Sure, we all want someone to be able to give us that magic key to riches, but the truth is it cannot be done. As Charlie Munger of Berkshire Hathaway once said, "People have always had this craving to have someone tell them the future. Long ago, kings would hire people to read sheep guts. There's always been a market for people who pretend to know the future. Listening to today's forecasters is just as crazy as when the king hired the guy to look at the sheep guts."
We are now entering the heart of prediction season. The prognostications will flow thicker than the egg nog.
For the next several weeks, the cable news channels will be packed to the rafters with well-dressed, well-educated men and women making confident predictions about the economy and the markets in 2019.
No matter how smart and well informed these folks appear to be, the truth is that they are making guesses, and risking your money on their guess is not smart; it's highly unlikely to be a profitable endeavor.
Always remember that when you get a prediction or forecast from the media, what you're getting is a marketing endeavor, not investment advice. If your guess is close to right, the sheep guts aficionados will bury you in money. If you're wrong, no one will remember.
It is a low-risk marketing ploy with potentially very high rewards for the lucky few that get the sheep guts right. They want to get your money into a fee-bearing program. Earning you a return on those dollars is a secondary concern at best.
To summarize: In 2019, stocks will fluctuate. Play it smart and you'll do well. Any prediction beyond that is marketing and should be avoided.