Six Life Lessons • Market Forecasts
Monthly AIRE Perspectives – December 2024
Dear Friends and Valued Clients,
Please see below for The MAP – Monthly AIRE Perspectives for this month.
Six Life Lessons That Also Apply to Investing
In this excellent article, featured in Kiplinger Personal Finance, Dimensional Founder and Chairman David Booth discusses principles that can help in both life and investing. Some of these lessons might sounds familiar to you, as we have discussed them with clients for years. You can click here to read “Six Life Lessons That Also Apply to Investing” – and here are the highlights of the six lessons:
Uncertainty creates opportunity
Plan, don’t predict
Flexibility adds value
Harness the power of compounding
Control what you can control
Tune out the noise
Why Market Forecasts Should Not Matter
We often talk to clients about the importance of planning versus predicting, as we believe that public markets are quite efficient and have priced in all news and expectations. Plenty of data to support this view is provided by the regularly-missed forecasts of Wall Street strategists. Each year in December, we review the predictions that were made by strategists at the beginning of the year, and the predictions virtually never fail to disappoint. In a recent article in Forbes, author Tom Aspray noted that “None of the 20 estimated year-end price targets are even close to where the S&P now stands a month away from the end of the year. With the S&P’s 26% rise year to date in 2024, the index level stood above 6,000 at the end of November. This makes the annual return implied by the closest estimate (E1) currently more than 10 percentage points too low (26% vs. 13%) and the furthest estimate (E20) nearly 40 percentage points too low (26% vs. -12%)!” Here is what that chart looks like:
Year-End 2024 S&P 500 Price Targets From the End of 2023
When we see data like this, it reiterates the importance of sticking to the principles of successful investing versus investing based on predictions. Some food for thought!
Happy Holidays and all our best wishes for a very Happy New Year!
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