The only accurate stock market prediction you’ll read today

marketsI’m here to help you in this troubled time for the market.

I will provide you with an accurate description of why the market is down, one that differs from everything you have read in the media. Not only that, I’ll make a bold prediction about where markets are going next. And I’ll tell you how to interpret every article you read about the market.

First, here’s why the market is at it’s current level.

Stocks are at the exact point where investors who feel their prices will go down are in perfect balance with investors who feel their prices will go up.

This is absolutely true and deeply unsatisfying. I’m sorry. The truth is far less entertaining than reading about China, employment prospects, and gas prices. But financial reporters have space to fill. Investors are anxious. Unfortunately, nothing you read is at all useful.

Why? Because you are not smarter than the entire market. Do you think you’re smarter than hundreds of analysts at Fidelity or Goldman? Do you think the information they got yesterday, filtered through a reporter’s brain, is going to give you an insight they missed? Are you really the next Warren Buffet?

Every article about markets is bullshit. Just as an example, let’s take a look at Beth Healy’s article in today’s Boston Globe, China woes, Fed questions drive down stocks.  Assume you’re reading this to learn if stocks will go up or down. What’s your takeaway? (I’ll highlight all the weasel words in bold and the blindingly obvious but useless statements in bold italic.)

I would buckle in, this isn’t going to be graceful,’’ said Mark Zandi, chief economist at Moody’s Analytics. [After a week of violent swings, more volatility, got it. But up, or down?]

A government report showed that manufacturing and factory activity in China slowed in August, adding fuel to concerns that economies around the world could stumble as a result. [So all these global economies are connected? Ah, now I have clarity.]

Questions about the US Federal Reserve’s direction on interest rates, coupled with late-summer vacation absences on Wall Street, also helped set a negative tone for the session Tuesday. [Luckily, I have a mole inside the Fed who tells me which way they’re going on interest rates, so I’m set; the rest of you, not so much. But . . . . damn, my mole’s at the beach this week! So I’m clueless just like the rest of you.]

[I]nvestors did not appear optimistic Tuesday, driving the price of stocks lower at the start of trading and keeping them down for the rest of the day. The Standard & Poor’s 500 index fell nearly 3 percent, to 1913.85. [OK, I think I have this straight now. When the top 500 stocks shed half a trillion dollars in value, that’s not a sign of optimism. Thanks.]

 [According to Bernard R. Horn, Jr., president of Polaris Capital Management, China’s Economy is] “not going to come grinding to a halt.” [Well, I’m glad that economic activity in the largest economy in the world won’t stop completely, because that would be really bad for stocks — and tragic for a billion Chinese people, too.]

Oil producers worry about slowing demand, even though globally it “has never been higher,’’ according to Jeff Mortimer, director of investment strategy at BNY Mellon Wealth Management. [Oil demand could be going up, or down. I bet oil prices could be going up or down, too!]

“We’re not used to seeing oil trade like this,’’ he said. US crude oil dove 8.3 percent Tuesday, to $45.12 a barrel. But that followed its biggest three-day rally in 25 years. [Called it!]

The volatility of stock and commodity prices isn’t making the Fed’s job easy, near term. The central bankers want to start slowly moving rates higher to reflect a stronger economy. But they don’t aim to make a swooning market worse. [Good, so now we know that interest rates could go up, or not. At least we’re not Fed governors. Apparently, those jobs are really hard.]

David Stubbs, global market strategist at JP Morgan Asset Management, wrote in a market report Tuesday that “a lot of the more experienced, more sensible heads are sitting on a beach rather than in the office, which could also be contributing to the sell-off.” [So when the wise guys get back, the market will go up. Maybe. Or maybe the wise guys will decide to sell. And I ask you: do you really think a smart financial thinker on vacation doesn’t know what the markets are doing this week and has taken no action? I’m guessing, but this is just a guess, that they have smartphones with them.]

So financial coverage is useless. (I do like those artistic shots of troubled investors silhouetted against big digital displays of glowing numbers and Chinese characters, though, those are pretty.)

But I owe you an uncannily accurate market prediction. Here you go:

In the future, some investors will change their mind about the value of shares. If more of them perceive that shares will be more valuable, prices will go up. If they perceive that shares will be less valuable, prices will go down.

And unless you have inside information, you will be the last to know.

If you believe in the long-term prospects of the U.S. and world economy, buy an Index Fund and hold it for a decade. If you do not, invest in something else. But when you read finance news, recognize that it’s for entertainment purposes only.

Photo: Lukas Jackson/Reuters

7 responses to “The only accurate stock market prediction you’ll read today

  1. “Financial coverage is useless.” Except that it can drive the market. Which is precisely what everyone participating in it is trying to do.

  2. I agree with the conclusion that Financial news is entertainment. You use a lot of Bullshit get there. The title, “The only accurate stock market prediction you’ll read today” is bullshit. You cannot possibly know what all of the stock market predictions are going to be today.

    “Stocks are at the exact point where investors who feel their prices will go down are in perfect balance with investors who feel their prices will go up.” “Exact” and “perfect” are problems, they go too far. If a stock is a trading at 89 and there is a limit order to buy 5,000,000 shares are 89, this would not be perfect balance even though the stock trades at 89 for an extended period. This statement is bullshit.

    “This is absolutely true…” Well, when you say it is absolutely true then it has become so. I am hoping one day to get the designation, “arbiter of absolute truths.” This is the type of statement that you rally against.

    “In the future, some investors will change their mind about the value of shares. If more of them perceive that shares will be more valuable, prices will go up. If they perceive that shares will be less valuable, prices will go down.” If the one investor is Warren Buffet and 10, 100, 1000, or even 100,000 investors think it is going to go down. Who wins this battle? Stated in dollar terms the statement becomes better, but even that argument would be terrible.

    “If you believe in the long-term prospects of the U.S. and world economy, buy an Index Fund and hold it for a decade.” The connection between believing in the economy and an index fund being a good investment does not exist. A decade is as arbitrary as 7 years 3 months 4 days 1 hour 9 minutes. Your decade holding period could end at a terrible time for the market; think of the end of 2008 and beginning of 2009.

    The idea that financial reporting in entertainment is valuable. This is my favorite part of the article; “Do you think the information they got yesterday, filtered through a reporter’s brain, is going to give you an insight they missed?” That is really something to think about when considering financial news.

      1. Your post is factually incorrect. Your post makes a specific financial recommendation with a specific timeframe that you are not qualified to make. It does not take a lot of knowledge of the details of the market to call bullshit.

        How do you know what I believe? I believe the financial press is entertainment, you expanded my knowledge to not believing what I read in the paper. This is a huge bullshit leap.

        I think a better response would have been, “woops”!

  3. It took some bullshit to make the simple statement that reporting on the stock markets is all bullshit. Kind of like fighting fire with fire? It’s actually kind of bull shitty that Warren Buffet is invoked. Reminds me of the tale of people shuttling Einstein’s preserved brain around after his death. This was based on the superstition that anyone having an organ like that would be as smart as him, if we could find out why it is better.

    Warren Buffet stated that making money in the market is simple (just not easy). It takes hard work and self control to apply the principles one adopts consistently, and without emotion. I see in this particular blog post quite a reservoir of emotion. This is why you may have gotten burned trying to invest and turned your wrath on the messengers, with their weasel-words. You are assuming garbage-in, garbage-out for investing results. But people like Buffet, and others, are not superhuman beings. One just has to know how to filter the incoming information – and find the tidbits that have leverage. That’s my investing advice.

    1. My investments have done fantastic. I’m just trying to help my readers.

      As for Warren Buffet, he does a lot more research than just reading what’s in the paper. He also says “if you don’t have time to do the research buy an index fund.” Good advice.

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