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The Equitymaster Research Digest

Stock Market Forecasting Is a Bad Idea
Dec 23, 2016

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  • Bill Gates, value investor
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On being approached by a young man wanting to know the future of the stock market, JP Morgan, one of America's greatest bankers ever, said:

  • Young man, I think the market is going to fluctuate.

The MD of a large Indian fund house had a JP Morgan moment recently. But while JP Morgan's advice was sardonic, the MD spoke as if he were revealing a priceless pearl of wisdom:

  • The market is going to be pendulum for next few months. It is going to be a pendulum because there is a fight going on between the optimist and the pessimist.

Sorry Sir, this is in one ear and out the other. Talk about a totally accurate yet absolutely useless forecast.

At Microcap Millionaires, we prefer useful recommendations over merely accurate forecasts.

Take our recently closed positions for example.

We recommended IFGL Refractories and NALCO in February 2016 and closed both positions just a few days ago.

Their gains? A healthy 126% and 76% respectively.

We recommended these stocks because we knew that, no matter where the broader markets are, there are always pockets where investors overreact to fear.

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