Nov 17, 2008|
Investing: Unpredictable predictions
Anyone who tunes into financial news channels must have definitely been witness to scores of guests/experts (or should we say soothsayers?) make their appearance on these channels. They never seem to tire of making predictions about how the Sensex or Nifty is going to be a day, a week, a month or a year from now.
Irrespective of the number of times they might have fallen flat on their face after making numerous predictions in the past.
"The markets will be range bound for the next couple of days."
"The Nifty will not touch a new high for the next couple of years."
"We will see the Sensex touch 6,000 in the days to come."
These are just some of the forecasts we get to hear all the time.
Investors hope to get a clue from these people presuming them to be very knowledgeable since they are professionals in the industry, and thus look up to their opinions. They are at the same time baffled by the contradictory views of different experts. Amidst all this, what is most remarkable is how most people fail to realize the hollowness of these predictions due to the implicit assumption they contain.
When the Sensex is at 21,000 and some well reputed professional is quoted on TV saying that it will go on to "touch 25,000 in the coming months," the implicit assumption in that statement is that no unfavorable event will take place in the world that could work against the positive economic scenario prevalent at that time.
In the same way, if someone is now quoted saying that "the markets will test 6,000 levels," the implicit assumption is that nothing positive is going to happen the world over to uplift the current sorry state of the markets. But as we have seen time and time again, the world is not as simple and predictable as these statements make it out to be. It is a fast paced, uncertain, and quite often random world, where events, both tragic and euphoric, can come as unexpectedly as they have in the past.
So the next time you find yourself seriously taking note of such predictions, be sure that you are in effect paying heed to people who claim to foresee the future course of the world. The credibility and necessity of such people and their prophecies are for you to judge.
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