Earlier this week we were supposed to have a storm of historic proportions. Here in Monmouth County, NJ the experts were calling for 20-24 inches of snow. People flooded the grocery stores for milk, bread and other essentials.

As you’re likely well aware, the meteorologist predictions didn’t come to fruition. We got about 8 inches of snow. Certainly nothing to sneeze at, but not the historic storm that was expected.

The problem with predictions is that they rarely come true. However, people have an infatuation with them anyway. Jason Zweig of The Wall Street Journal recently wrote:

“Humans don’t want accuracy; they want reassurance…admitting that the future is unknowable is just too frightening.”

This is why we aren’t in the prediction business at Mullooly Asset Management. Do we wish that we could predict what the market will do in the future? You bet. Unfortunately, we can’t do that and neither can anybody else.

Financial pundits and other advisors will continue making market predictions forever. They haven’t stopped yet, so why would they now? Their predictions might make investors feel warm and fuzzy inside because we all crave certainty. This creates a dangerous false sense of security. Making financial plans based on averages, extrapolations, and predictions is not something we do at Mullooly Asset Management.

We use point and figure charts to tell us what’s happening right now. It’s kind of like looking out the window to find out what the weather’s doing today instead of banking on what the 5 day forecast predicted.

Sources:

http://www.wsj.com/articles/lessons-learned-from-the-year-of-surprise-1419957058

http://www.nj.com/weather/index.ssf/2015/01/15_best_memes_from_the_blizzardof2015_that_wasnt.html