David Booth on Forecasting

About this time of year, people start talking about forecast for upcoming year. Every year, there's somebody on one of the talk shows, who'll say, next year is gonna be a stock picker's market. You're gonna have to be selective. For 37 years we've been in business, and it's never turned out to be the case. We now have roughly over 90 years of stock return data in the US. It covers a wide range of scenarios. Great Depression, high inflation, low inflation, high interest rates, negative interest rates, long periods of time throughout. Stocks have done about nine or 10 percent a year. A simple, simple story but there's so much noise all the time in the background from the popular press. Nearly all of it being things people can say to induce you to trade. 'Cause that's where people make the bucks, is when you trade. I think at Dimensional, what we're trying to do is educate people on the folly of doing all this trading. What you have to do is come up with sensible solutions that you can stick with through tough times whilst benefiting from the good times. There are no guarantees, but what's important is that people feel like they're gonna be okay throughout.