The game Wall Street protects

What is the game that Wall Street protects? It’s the idea that “gurus” can make predictions good enough that they are better than random guessing. Not just predictions about future market movements – but in choosing sectors and individual securities that will out-perform or under-perform. Wall Street and its minions (financial media) very rarely check their “gurus” prediction accuracy by going back in time and checking each one. This isn’t caused by a lack of oversight or incompetence – this is an orchestrated protection of Wall Street and their profits. One of our favorite authors, Larry Swedroe, does check from time to time, see below. Wall Street is a marketing machine – not a “great advice machine”. They use fear and greed – the fear of losing money, the greed of making a killing – to sell, sell, sell. It’s all smoke and mirrors – and the fundamental idea that supports it all is that “gurus” can predict with some regular degree of success. I have to admit – it’s very compelling! Listening to forecasts can be fascinating! Business people love it. Each year, local chambers sponsor a big gathering where a local economist offers their predictions of the year ahead. (Do they review how this forecaster was wrong last year?  No!  That would be rude!) It is alluring. Similar to the attraction that some may have with the weather forecast, political candidates or simple gossip. Should  business owners make plans based on these predictions? Well, only if their planning contains contingency plans for the situation that the prediction they are assuming is correct – is dead wrong. This...