When It Comes to the Market, the Experts Are Wrong
By -Edward Lance Lorilla
February 08, 20257 minute read
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Stock market predictions are no better than flipping a coin. Here's how you can increase those odds.
February 8, 2025
When It Comes to the Market, the Experts Are Wrong
After hearing about winter weather across much of the nation, I decided to check the Weather Channel website to see what it was all about.
Sure enough… “Barrage of Winter Storms Ahead: Here's The Timing”
Because Winter Storm Garnett is imminent, the forecasts were mostly reliable. They provide a valuable service helping people prepare for emergencies in potential areas of impact.
Most of us check the weather every day. The Department of Commerce discovered that the majority of Americans check the forecast nearly four times a day.
If the Weather Channel predicted rain today, you’d probably keep an umbrella on hand, right?
But what if they said there’s a chance of rain two weeks from now? Would you set a reminder to wear a rain jacket that day? Probably not. It may or may not pan out.
According to statistics from National Oceanic and Atmospheric Administration (NOAA), you’re valid in not making weather-related plans weeks in advance. The further out the prediction, the lower the accuracy.
A five-day forecast has about a 90% accuracy.
A seven-day forecast has about 80% accuracy.
A 10-day (or longer) forecast is only right about half the time.
Now imagine nine months out…
That’s all fine for the weather. It’s pretty easy to plan for a downpour the same day or just a few days in advance. But what about predictions that tend to rattle the market… and our money?
Is your local meteorologist have better accuracy than stock market “experts”?
In short, yes.
According to Nationwide, you should be skeptical of stock market predictions for the coming year.
They found that Wall Street strategists underestimated S&P 500 returns 13 of the past 16 years, missing year-end price targets on average by approximately 10%.
Those are big misses. Maybe not quite as bad as a storm being predicted for Florida but hitting New England. But investors who listen to these forecasts and become overly cautious are no doubt missing potential gains.
In another study, the CXO Advisory Group collected data from 2005 to 2012 of 6,584 forecasts for the U.S. stock market. These forecasts were offered publicly by 68 experts, and they found their accuracy was as good as flipping a coin.
Here is the accuracy of some of those well-known experts:
Jeremy Grantham, Chairman of GMO LLC, a global investment management firm: 48%
Mark Faber, publisher of “The Gloom, Boom and Doom Report”: 47%
Jim Cramer, CNBC superstar: 47%
Gary Shilling, Forbes columnist and founder of A. Gary Shilling & Co. Inc.: 38%
Abby Joseph Cohen, former chief U.S. investment strategist at Goldman Sachs: 35%
And these are the professionals!
Some of the volatility we’ve already seen this year stems right from what experts are predicting – whether accurate or not. They aren’t making predictions for the market, but for those pesky interest rates.
The ups and downs in the market we saw earlier this year had a lot to do with rates and where experts think they are going. Interest rates and their direction will remain one of the biggest movers of stocks this year, and we would do well to ignore the predictions.
Think of the whiplash we experienced in January. The Consumer Price Index (CPI) came in hotter than expected early in the month, and markets reacted negatively. That’s because if inflation rises, then the Federal Reserve is less likely to cut interest rates. The Dow Jones Industrial Average fell more than 500 points the next day.
Right after that, then President-Elect Trump’s Treasury Secretary nominee Scott Bessent said he expects inflation to be closer to the Fed’s long-term goal of 2% under the Trump administration.
Forgetting the data it had just seen, the stock market cheered – just on this prediction – and we saw the biggest rally since the election in November.
Bessent announced just two days ago that President Trump won’t push the Fed to cut rates further, which he had been talking about. So the back and forth on what the President wants vs. the Fed seems to be changing frequently.
“Predictions are hard, especially about the future,” said physicist Niels Bohr said. Hard to argue with that.
A switch was flipped last September that could rapidly accelerate a massive global economic shift. The NYT says it will: “split history into before and after.” No matter where you live or what you do it will have huge implications for you. Click here for 3 steps to prepare.
Fighting the Unpredictable with the Predictable
Market predictions historically stink. And they tend to cause volatility with even just an announcement that something might happen.
Data removes any of the guessing games and subjectivity out of stocks. It allows us to make smart decisions based on what is and not what might be.
That’s why I created my Quantum Edge system. By focusing on the absolute best stocks in the market – identified by the right data analyzed the right way – we find those with less risk and a higher probability of sizable profits.
I built my whole Quantum Edge system to find those exact stocks by focusing on the characteristics that indicate higher prices ahead. I can reliably count on my system leading to moneymaking investments 70% of the time. That’s way better than a coin flip.
I base all of my stock recommendations in Quantum Edge Pro on a trifecta of high-probability data: super strong fundamentals and technicals combined with green lights showing me that Big Money is buying in.
This system has an exceptionally strong track record of using data to accurately pick stocks that will outperform the broader market. One model strategy has us beating the S&P 500 by 7 to 1 since 1990.
I also like those odds much better than those experts we talked about.
I live and breathe in the world of data. It’s so much more reliable than mixing emotion and investing, which tends to yield ugly results. I’ve been there.
Best of all, the right data analyzed the right way produces forecasts that are right most of the time and long into the future. Unlike with weather forecasts, accuracy doesn’t diminish within days. In fact, it’s just the opposite.
I agree with W. Edwards Deming, who said, "In God we trust, all others must bring data."
Meteorologists do it, but weather patterns aren’t as conductive to long-term accuracy as stocks. That’s good news for our financial well-being and retirement plans.
