The uselessness of forecasts
In a great book Wall Street on Sale, the author, Timothy P. Vick, writes on the futility of forecasts.
“Each year, the leading business schools graduate thousands of finance students taught the same arcane formulas, the same trading strategies, the same valuation principles, and the same forecasting models. It's no wonder that so few can see the broader context of their actions. No wonder, too, that so few beat the market over time; they futilely spend their days trying to beat each other. These graduates, who are today's market strategists, analysts, and fund managers, have become like Marshall McLuhan's fish that don't know they live in water. They swim in a tank separate from another fully functioning world, yet they believe the people on the outside of the glass need assistance. They, however, are the ones trapped.
When investing is buoyed by short-term earnings-which, in turn, swims on the current of predictions-it ceases to be investing, and becomes gambling.
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