Investing is serious business, and trying to find a professional that can truly predict the market’s ups and downs is a risk you cannot afford to take. If someone’s prediction hits the mark, as Meredith Whitney did in 2007, you can chalk it up to good old fashioned luck. Unfortunately her prediction performance has taken a decline as of late.
So how do you decrease the emphasis and chance of luck with investing? One of the first steps we recommend is to develop a long term financial plan that accounts for the risk tolerance an investor can absorb and plan accordingly. Second step, plan for the long haul. The greatest benefits of investing are often seen over long term periods. Third step, understand the markets are unpredictable and as Mark Hulbert explains in his column, “learn to appreciate the huge role played by luck”.