Follow a Forecaster or Flip a Coin?

This blog was originally published in December, 2014
Do you have a favorite forecaster? If so, when is the last time you checked his or her track record? You probably should because research exists that shows professional forecasters are about as accurate, on average, as a coin flip.
The chart below is the result of an ongoing analysis of equity market experts and their forecasts — the so-called stock market gurus. Analysts collected data from market forecasters since 1998. They tracked and graded the forecasts, based upon accuracy, made by dozens of popular gurus over the years. And the results aren’t good! The “experts” accurately predicted market directions only 48% of the time — about as accurate as a coin flip. Continue reading