Markets and economies are unpredictable
Monday 14 May 2007
Given there are thousands of stock market experts, unit trust fund managers, private money managers, and advisors, some will make spectacular calls and accurate predictions. Yet, extensive research has shown that, as a group, the performance of experts is what would be expected from chance guessing, there is no way of knowing in advance who will make the right call, and past success is unrelated to future performance. For example, studies have found that past earnings growth for companies is only weakly correlated with future earnings growth or stock prices. Never-the-less, active managers and investors excitedly watch earnings reports for clues to the future price of a stock.
Economists in both the public and private sector provide a continuous series of data and forecasts in an attempt to predict future economic and investment trends. Yet, numerous studies have found economists cannot predict major turning points in the economy, forecasting skill is, on average, about as good as chance guessing, and economic data is of poor quality and subject to frequent major revisions. For example, one study in the US found that Federal Reserve economists did significantly worse than chance in predicting economic growth and turning points in inflation from 1980 through 1995.
Categories: Asset Class Management, Research, Active Funds
posted by Murray Round Wealth Management @ 11:31,
The Authors
Nicholas Round
Nic is the Managing Director of Murray Round Wealth Management Limited, who seeks to ensure the advice provided is truly independent. Based in Shropshire with clients local, national and worldwide, Nic has strived to find the best possible service for his clients needs, by researching and studying the market, trends and philosophies. Nic strongly believes Asset Class Management will bring his clients Financial Freedom, Independence and Happiness.
Kirsty
Kirsty is our communication guru. Managing information requires considerable due diligence and her passion for organisation gives the clarity we all seek. From Shropshire, with a Psychology Degree and much travelling, she is now back in Shrewsbury...and London often, keeping us all at Murray Round focused.
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