Warren Buffett: Ignore Market Predictionshttp://www.fool.com/investing/general/2014/03/22/warren-buffett-ignore-market-predictions.aspx Dan Newman
March 22, 2014
Warren Buffett this month released another chapter of his investing gospel, the annual letter to Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B) shareholders. He managed to make two sex jokes. However, as he does every year, he also aimed to fill his letter with wisdom to improve readers' fortunes. And one of those pieces of wisdom was to ignore others' opinions on the market.
Simply put, don't read, listen to, or otherwise ingest most financial media related to market predictions.
Specifically, Buffett wrote:
What Buffett means is that much of financial news is fluff. This doesn't include "hard" news like profit reports, new ventures, or mergers and acquisitions, but rather those talking heads who call market tops, bottoms, and anything in between. There are a few things that back up this thinking.
It's not valuable
Analysts also have a greater incentive to forecast a positive price change. As The Wall Street Journal quoted Citigroup chief U.S. equity analyst Tobias Levkovich:
With a more scientific approach, consulting company McKinsey found, "On average, analysts' forecasts have been almost 100 percent too high." And these are the analysts who have made a career in figuring out where stocks and the market are headed -- not the media that reports it or, even worse, makes a best guess.
It may not have your interests in mind
On the other hand, if incentives align, financial