Well it’s the time of year to be guessing what might happen in the next 12 months. There are tips on what’s in store for technology, the grand final winners and of course the sharemarket. The major newspapers and investment magazines contain various predictions for where the ASX will finish 2012. But how useful is it?
Let’s look at some of the economic forecasters and where they think the ASX200 index will be by the end of 2012:
Chris Caton BT 5,000
Shane Oliver AMP 4,700
Savanth Sebastian Commsec 4,600
How good are these as a guide for what will happen? Well if we look back 12 months ago the views were very optimistic! The predictions included:
Citi 5,500
UBS 5,450
JP Morgan 5,000
I’m not just singling these three out (they were the first I found in a google search), most economists predicted the market would be well above the year end close.
In 2011 the index finished the year at 4,056. What does this tell us? Certainly trying to forecast the ASX a year ahead is near enough to impossible. At best it gives some indication of sentiment at the time the prediction is made.
Focus on what you have more control over – what dividend will you receive? How much can you regularly save to invest?
Fearless Forecasts? How about Gut Feel Gaffes?
I reckon all we do really know is that the market is cheaper now that it has been for some time, and that history tells us that to buy in gloom is often a wise choice. No guarantee, but a good guide for the cashed up.
The media certainly paint a very gloomy outlook. Even despite the fact that I’m aware of that, I can’t help but find myself sometimes paying heed to the naysayers. If anything, it’s probably made me even more glad that I don’t make the big financial decisions without a bit of external perspective. As you alluded to David, misery is trying to control the things that can’t be controlled!