Q&A: Foretelling The Future?

Question:

Why can’t advisers tell the future?

Answer:

No one can systematically predict the future. Market prices are forward-looking and are set based on expectations. As new information emerges, it is quickly reflected in prices, but future news is by definition unknowable.

The sensible approach is to control what you can (e.g., diversification, taxes, costs, and risk exposures) while ignoring the ever-present noise in the media and maintaining your discipline. Even though you may think the world has changed, the keys to a successful investment experience have not. Predicting the future is not a prerequisite of long-term investment success.