Stock Market Forecasts: A Waste of Column Inches

Is there anything more useless than a long newspaper article about where the

stock market might be headed? Dean Baker has nothing

good to say about Jeremy Peters, in the NYT, talking to

fundamental-analysis types and coming to the conclusion that stocks

are going up. But I doubt he’d be much more impressed by Jim Browning,

on the front page of the WSJ this morning, talking to technical-analysis types

and coming to the conclusion that stocks

are going down.

In reality, trying to forecast the stock market is a fool’s game, and no one

does it very well. Both of these articles are predicated on the extremely dubious

assumption that professionals in the financial-services industry who look at

the stock market all day are better at forecasting where it’s going to go than

would be, say, sheep farmers in Wisconsin. But this is not the case.

If I want a forecast for where the stock market is going to go, I’ll ask the

nearest five-year-old, and I’ll have just as much confidence in the result as

I would if I’d asked a chap who’s been drawing lines on charts since 1966. But

I doubt my five-year-old’s prognostications would be considered newsworthy enough

to make it onto the front page of the Wall Street Journal.

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