Every December comes the financial world ritual.
S&P 500 price predictions for the following year.
As many as you have time, or care, to read.
It’s the season when anyone who manages someone else’s money.
Steps up to the microphone or the keyboard.
To deliver what they think they know about the future.
Last year’s forecasts missed the mark by a wide margin.
The same result with the forecasts for the year before that.
You would think confidence in any forecast would be lost by now.
After 42 years managing clients’ 401(k) mutual funds.
With investment manager contacts across the U.S.
I can tell you something most professionals won’t say.
No professional money manager actually acts on their forecasts.
They don’t set a “buy?and?hold” stock market strategy for the entire year.
Based on a static mid to late December prediction.
Instead, they respond in real-time to real?world events:
• Shifts in economic data
• Interest rate changes
• Stock market volatility
• Political risks not visible on January 1st
Here’s what the investment managers are thinking.
But don’t take the time to tell their individual investor clients.
Principal preservation comes above everything else.
In your 401(k) that means two things.
Preservation of recent stock market gains.
Preservation of recent personal and company-matching 401(k) contributions.
Forecasts make for great headlines.
And soundbites in the financial media.
But they make for terrible 401(k) investment management strategies.
Please, stop relying on forecasts.
And start managing your 401(k) the way professionals will next year.
Protect your 401(k) first.
Pick the best 401(k) mutual funds you can second.
Want a simple framework to manage your 401(k)?
Let’s connect and I can share a 401(k) checklist.
P.S. You can’t apply investment professionals forecasts to manage your 401(k).
