There’s one weasel-word that can immunize any prediction: “yet.”
Talk to an inflation hawk about price stability and he’ll concur that prices haven’t risen much…yet. Complain to an unreformed Cold Warrior about how Russia seems to be much more market-oriented she’ll agree…for now. Challenge mega-bears or uber-bulls with the 10-year do-nothing nature of the stock market and they’ll smile and say, “Not yet.”
“Yet” is the universal acid: it indemnifies anyone who uses it. I once read a market analyst who, after predicting a market meltdown that didn’t come, started off his discussion by stating that he couldn’t tell the difference between being wrong and being early.
Well I can tell you that my clients know. They don’t want to be early, they want to meet their financial objectives. They don’t’ have extra money to pay for weasel-worded advice, or doctrinaire positions. Markets are immune to ideology. They don’t’ go up or down on command. They do embody the collective expectations of millions of independent investors.
It’s hard to change your mind when your predictions don’t work out. But it’s essential when you’re dealing with the real world. Because the one of the first principles of investing is not to fool yourself—and to also recognize that you’re the easiest person to fool. But if we’re honest, we recognize how little we really know. Yet.
Douglas R. Tengdin, CFA
Chief Investment Officer
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