One of our key goals at my site, Investing Haven, is to educate investors. There is so much financial content available on the internet, and, most likely, in everyone’s mailbox, that readers ONLY find conflicting messages. That makes market forecasting extremely challenging.
Moreover, a large part of investors are selective in that they stick to analysts who bring the message they LIKE to hear. One such example is the gloom-and-doom community which always finds a way to justify that the next stock market crash is just around the corner.
Take as an example the bonds to stocks ratio. Look at what that ratio did in 2016: it showed a “break out” similar to 2007. That pattern would suggest a stock market crash was brewing in 2016. Nothing was further from the truth, as markets only went higher since then.
Market forecasting requires research and analysis
The key take-away for investors is that they should be very careful when reading financial content. Moreover, and even more importantly, it can be very damaging to one’s portfolio when relying on the wrong indicator. Looking back at the chart in this article, the bonds to stocks to ratio proved to be ‘wrong’ in predicting what markets would do.
Market forecasting is an art, in and on its own. It requires a lot of research and analysis in order to come to a methodology that truly works.
Investors should avoid relying on wrong indicators. News is definitely not a reliable source of information, and following stubborn analysts neither.