‘Tis the season for predictions and pontification. My advice: Ignore it.
As the new year approaches, brace yourself for the avalanche of market and economic forecasts. Yes, I’ll be part of the process and share my Outlook, as I do every year. But remember that in today’s noisy media environment, the surest way to garner attention is to make bold predictions and deliver them with absolute confidence. That doesn’t mean those predictions will be correct—and odds are they won’t be. But they will get airtime.
I’m going to be brutally honest. Outlook, forecast, perspective … those are all just polished ways of saying “best guess.” The reality is that no one knows what will happen in the next quarter or four—or how markets will react.
Take this past year as an example. Suppose on January 1, 2025, you somehow knew we’d see a historic increase in tariffs, the longest government shutdown on record, the Fed cutting interest rates and defending its independence, the labor market stalling and inflation clocking in around 3% (a full percentage point above the Federal Reserve’s 2% goal).
With all that information, would you have expected every single Vanguard fund to be positive for the year, with gains (through November) ranging from 3.3% to 58.4%? Probably not.