Have fun in the guessing game

The only predictable thing about the stock market is its unpredictability

- Marcus Padley

So, there I was in my broking office in 2007, before Christmas, before the new year, when the phone rang. It was a financial journalist. I picked it up. A bigger loser than me. Working the Christmas shift is no fun and finding content to fill a whole newspaper for two weeks was a job I had some sympathy for.

He was doing the usual thing for that time of year, ringing a few brokers, getting a few predictions for the year ahead. An obvious filler for the business pages. He was running a “bit of a competition” he said, trying to raise enthusiasm from the grave, to guess the S&P/ASX 200 level at the end of next year.

Well, any broker with half a brain will tell you that you the only way to win a stockmarket guessing game is to own the infinite upside or downside. So, I asked the range. The high was too high, so I went low.

Next thing I’m on the front page of the business section on January 1, 2008 predicting a crash. Much to the horror of my broking firm, my clients and myself.

And this is how I predicted the GFC and the stockmarket collapse of 2008.

As any honest broker will tell you, predictions are the mother of all downfalls. Ask any broker who’s been fool enough to volunteer to run a hypothetical portfolio in a national newspaper. Getting thrashed at portfolio management by a dartboard, an astrologer, a monkey and one of the Oarsome Foursome is not something a financial professional recovers from.

And that’s what will happen, because the odds are four to one against you winning, and you know why? Because this is a tough game and, on any timeframe shorter than Warren Buffett’s, the only predictable thing about the stockmarket is that it’s not predictable and a monkey is just as qualified as a financial professional to predict the stockmarket in the short term.