COLUMN: There are three kinds of people who make market predictions:
- Those who don’t know
- Those who don’t know what they don’t know
- Those who know very well they don’t know — but get paid handsomely for pretending they do
— Burton Malkiel
The reality is that no one can reliably predict what will happen in markets over shorter periods of time. The data on this is extensive.
Big macro calls go wrong, and when they do, investors are left playing catch-up. That’s the problem with making big calls, especially when you bet the entire portfolio on them.
It’s the start of 2026, and I’ve already seen plenty of predictions about how the year will turn out. Many of these come from large institutions like Goldman Sachs or JP Morgan, produced by highly skilled analysts running incredibly complex models.
So why do they get it so wrong?
As with most things in life, the answer is simple. These models are built using all available data at a specific point in time. If everything stayed the same, they would be right far more often.
The misunderstanding is that while the predictions are usually wrong, it’s not because the models are flawed. It’s because circumstances arise during the year that no one could have predicted. That’s new information the models simply didn’t have at the start. The world keeps changing, and unpredictable things keep happening.
That’s the core problem with trying to predict markets. A forecast may be logical and well-founded at the time it’s made, yet what is predictable is that something unpredictable will eventually occur and turn everything on its head.
By making large macro calls and allocating portfolios on this basis, you are almost guaranteed to fall short.
This is why a rules-based framework is superior. It doesn’t attempt to predict. Instead, it keeps emotions in check and helps prevent large, avoidable mistakes.
I’ve seen those mistakes, and they can be devastating. Once you’re behind, the temptation is to catch up — like a gambler after a big loss, rationalising that they just want to break even. The result is usually taking on even more risk.
The next time you hear a big macro call or market prediction, ask a simple question: how does it account for the unpredictable?
Have a framework. Use rules-based decision-making. This is not a game — it’s your money.
Matthew Matthee has a wealth management business that specialises in retirement planning and investments. He writes about financial markets, investments, and investor psychology. He holds a Masters Degree in Economics from Stellenbosch University and a Post Graduate Diploma in Financial Planning from UFS. MatthewM@gravitonwm.com
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