A recent study validates the complexities of predicting market trends. The research titled, Overprecision in the Survey of Professional Forecasters, analysed 16,559 economic predictions since 1968.
The results showed that while experts had a 53 per cent certainty in their accuracy, they were only right 23 per cent of the time. Alarmingly, when these forecasters were absolutely sure about their predictions, they still turned out to be accurate only two-thirds of the time.
Despite their extensive training and consistent feedback, these forecasters still saw this discrepancy. This suggests a much larger gap between certainty and accuracy for regular investors.
Portfolio manager and Behavioural Investment blogger, Joe Wiggins, advised in light of the study’s results to accept we are frequently mistaken, be ready for various outcomes, and refrain from opinionating on every subject – guidance that is relevant for investors and non-investors alike.