An essential element to being a better investor is being realistic about the predictability of markets.

As taken from our latest paper, ‘Five Essential Elements to Being a Better Investor’:

You not only need to be realistic about your own forecasting abilities, but those of the industry professional(s) you work with. Advisors, analysts, portfolio managers and economists are confident and well-informed, but they can’t consistently predict what’s going to happen in the short to medium term. With so many political-economic factors at play (some visible, many not), the direction markets take on any given day, week, month or even year is virtually random. In other words, the experts are always sure, but often wrong.

To be clear, it doesn’t mean you shouldn’t read sound research and listen to learned opinion. Quite the opposite. But we strongly suggest you avoid people who confidently and repeatedly make short-term market calls and keep listening to people whose approach and experience you respect, even if their recent views have proven incorrect. The last thing you want to do is only listen to experts who got their last call right.

Read more on the five essential elements here.