Casey Snyder & Tom Sedoric

Among many things, the New Year brings two inevitable events: the grind of tax season (especially for the unprepared) and a slew of economic and market forecasts that often read like a rejected comedy skit for Saturday Night Live.

Despite all we know about human nature and our desire to inhabit a psychic salon and gaze longingly into a magic orb that will give us an investing edge, the folly of forecasting marches on and on. Almost every financial firm is cranking up their forecasting algorithms and during the coming weeks and months, an avalanche of forecasts will be announced and released. They will be read and discussed as though they are oracles from Delphi. We contend, most if not all of them will be useless when it comes to the proper maintenance of our clients’ portfolios.

What these forecasts fail to do and frankly can never do is to account for the billions of data points of data at any given minute any given day that move markets one way or another. Trying to predict how these data points collude and collide with each other is literally impossible.

In a Bloomberg Businessweek column last March, authors Simon Kennedy and Peter Coy noted that economic forecasting is fraught with so many variables that even supercomputers strain to be even partially correct. “What’s behind economists’ poor forecasting performance? The main reason is that it’s simply a hard job,” Kennedy and Coy surmised. “Information about the economy is incomplete and arrives with a lag. And turns in the economy tend to be abrupt. Some are caused by financial shocks, such as stock market panics, which are themselves unpredictable.”

Yet, the thirst for what’s going to happen is so significant that otherwise sane and rational professionals will invest time digesting and seeking meaning in company earning and overall economic forecasts. In 2018, an unsigned Global Value Investment Corp column noted the forecasting variations in the Federal Reserve Open Market Committee (FOMC). When the FOMC speaks, headlines follow out of habit. It may be a habit worth altering.

When asked to project a one year, two year or longer-term interest rate, the forecasts of this elite group vary far more widely than one would expect given they come from some of the most informed economists and bankers in the world…this is really quite remarkable. For years the FOMC’s elite have maintained an aura akin to the Wizard of Oz. Yet despite evidence to the contrary, we still look to their forecasts to get us back to Kansas.

Or consider the esteemed International Monetary Fund which employs some of the most sophisticated and intelligent analysts in the world. Since 1988, the IMF has accurately predicted four (4!) of 469 global downturns by the spring of the preceding year. It makes sense that if the IMF has such a track record, what are the odds that even the most astute of financial firms is any better?

There is an alternative to plunging into what Merrill, UBS, Morgan, Vanguard and the rest have to say about 2020 and beyond. We don’t ignore the information but keep it and everything in perspective. We believe that time would be better spent educating our clients as any competent fiduciary does and helping them control what they can control in a volatile, uncertain world.

  • Reflect on 2019 and its successes and what can be done better.
  • Review cash flows and evaluate estate plan.
  • Discuss with our spouse or significant other about expectations for the future as individuals and as a family and how we might evolve personally, professionally and financially.
  • Double check insurance policies in general and your charity/philanthropic intentions.
  • If necessary, recalibrate risk tolerances.

Of course, these tried, true and disciplined traits don’t make headlines. But they go march farther to building a successful portfolio than anything gleaned from a hot-off-the-press financial forecast.


This information has been obtained from sources deemed to be reliable but its accuracy and completeness cannot be guaranteed. The views expressed are those of Tom Sedoric – Partner, Executive Managing Director and Wealth Manager and D. Casey Snyder, CFP® - Partner, Senior Vice President and Wealth Manager and are not necessarily those of Raymond James. Steward Partners Global Advisory LLC and The Sedoric Group maintain a separate professional business relationship with, and our registered professionals offer securities through, Raymond James Financial Services, Inc. Member FINRA/SIPC. Investment advisory services offered through Steward Partners Investment Advisory LLC.