Originally Posted by
roger wiegand
People who make those predictions make lots of money from them, even more when they convince people to churn their portfolios based on their predictions. There's a lot of money to be made by making these predictions, about 90% of the "financial advisor" business is based on convincing investors that you have knowledge that no one else does or that you are smarter than the other guys.
The more interesting question is why, in the face of compelling data to the contrary, do people seek out, believe, and pay for such predictions? The number of actively managed mutual funds that consistently outperform their relevant market index is approximately zero, yet such funds dominate the market. (Yes everyone has their anecdote about how some fund tripled in one year when the market went bad, and all of those people seem to assume that they will pick that fund this time rather than the other 10,000 that will tank along with the market.
I think it comes down to most people being much more interested in and compelled by a good story than by data. Seems to be how humans are wired.