What’s Your Prediction?
Peyton or Cam? Denver or Carolina? Tonight’s the big night! Super Bowl Sunday. The unofficial biggest sports holiday in the United States. Many of us will gather with our friends and family to cheer on our favorite player or team. A few, like my wife, will tolerate the game just to watch the commercials. Beginning this morning, there will be wall-to-wall coverage on TV and radio with “experts” giving us their “informed opinion” on which the way the game will go quarter-by-quarter, MVP predictions, and even final score guesses.
It reminds me a lot of what I see when I turn on CNBC or Fox Business. Instead of Super Bowl hunches on ESPN from ex-quarterbacks and ex-defensive tackles it’s the so called “experts” making their own guesses on what the stock market is going to do next week, the direction of the price of oil, or if China is going to continue devaluing their currency.
It goes something like this, “I know you don’t know which team is going to win the Super Bowl. But in your view, who’s going to win the Super Bowl?” or “I know you can’t time the stock market. But in your view, where is the market going?”
Here’s the thing: I totally understand why people are asking questions about the Super Bowl or the stock market. First, it’s just fun to guess. Second, a lot of times people think that having an opinion — whether it’s about the Super Bowl, the stock market, or the price of oil makes someone look smart. Being able to talk about these subjects must mean you really know a lot about football or you have more money and your investments do better, right?
It’s reached the point where talking about the stock market is an official spectator sport. We all feel capable of playing. While it may be be fun to talk about what the stock market might do at your Super Bowl party, don’t fool yourself because you are just guessing or forecasting.
Forecasts about the future of the stock market are very likely to be wrong, and we don’t know by how much and in which direction. Why would we use guesses to make incredibly important decisions about our money? Instead, focus on what you do know or need to know. Where are you financially? Where do you want to go? Then sit down with a trusted advisor and build a financial plan for you and your family. Finally, be disciplined in following the plan through good economic times and bad.
The basics of investing aren’t nearly as interesting as speculating about where the Dow Jones Index will be at the end of the year. But it’s the basics that will keep you from doing something irrational, like thinking it’s a good idea to bet your portfolio on a hunch.
And, if you were wondering, Denver by 7. Just my opinion.
Chris Kittrell is a partner and senior advisor with Rather & Kittrell, Inc. He is available at firstname.lastname@example.org