What Good is a Crystal Ball?

In our office, we have a crystal ball. It sits along the back wall in the main conference room. It certainly adds to the décor, and occasionally a client will walk by and look into it. If you ever want to check it out yourself, I can promise you that when you gaze into it, you’ll see straight through it to the pedestal it sits on.

We keep it in a place of prominence as a reminder that in the world of investing, no one has a working crystal ball. Your guess as to what will happen in the world over the next six months is as good as mine. Even if we were to be right, it begs the second question of how good of investors we would be with this knowledge.

Let’s turn back the clock to December 31, 2022 and, for a moment, pretend that the crystal ball surges to life. In the cloudy sphere, we will see actual news headlines from the year 2023. Surely, with this advance knowledge, we can prepare our investment accordingly.

Here are some article headlines from the Wall Street Journal this year:

• February 6, 2023: Chinese Spy Balloon Shot Down Off U.S. Coast: What to Know
• March 10, 2023: Silicon Valley Bank’s Meltdown Visualized
• March 22, 2023: Fed Walks Tightrope Between Inflation, Bank Turmoil—but for How Long?
• March 31, 2023: Donald Trump Indictment Deepens Partisan Divides
• April 7, 2023: Justice Clarence Thomas’s Vacations Prompt Calls for Stronger Supreme Court Ethics Rules
• April 14, 2023: Montana Lawmakers Approve Statewide Ban on TikTok
• May 24, 2023: Fitch Considers U.S. Rating Downgrade as Debt Talks Drag
• May 26, 2023: State Farm Halts Home-Insurance Sales in California
• June 1 ,2023: Dollar General: No Longer Downturn-Proof
• June 23, 2023: Directors Approve Contract Deal as Writers’ Strike Continues
• July 13, 2023: ChatGPT Comes Under Investigation by Federal Trade Commission
• July 25, 2023: Banc of California Agrees to Buy PacWest as Regional Lenders Seek Strength Together

Now ask yourself, with that information in hand, do you think the year is going to be up or down by the time we reach August of 2023?

I think the majority opinion would forecast that markets would be in turmoil – I would think so as well. So where are things at as of August 1, 2023?

• S&P 500 (US Markets) is up 20.33%
• MSCI All Country World Index ex-US (Developed International Markets) is up 12.96%
• Bloomberg Barclays US Aggregate Bond Index (Bond Market) is up 1.45%

You almost have to do a double take when looking at market performance year-to-date because things have been so strong. Gloom and doom have painted our newsfeed for months, and our collective anxiety is real. The vibe is off, yet the economy is purring. As they say, “the market loves to climb a wall of worry”.

Even with the gift of future-sight, trying to predict market performance is an exercise in futility. Without it, it is entirely impossible. Even for the people whose job it is to generate short-term market forecasts, their results are about as good as a coin flip.

So what is there to do? How do we be good investors with no knowledge of what the future holds? We must embrace the unknown. First, cast a wide net, invest a little bit in a lot of places, diversify your investment portfolio so you end up with a big batch of both winners and losers. Second, rely on a strong plan. We cannot control what the future holds, but we can certainly control how we react to it.

The information provided herein is for educational purposes only, and should not be construed as advice, including, but not limited to tax, legal, insurance, investment, or retirement advice. For your specific planning needs, please seek the advice of Integris Wealth Management, your tax accountant, attorney, insurance agent, or other professional as appropriate. Investing involves the risk of loss.