Investors Connect the Dots of Financial Forecasts at their Perils

investor dotsThe growing globalization of financial markets over the past 30 years means information from the four corners of the world is amassed in real time for the consumption of traders, pundits, and ordinary investors. But instead of increasing the batting average of financial forecasters, all this extra info only adds to the noise surrounding their less-than-perfect predictions.

Human nature compels us to attempt to connect the dots — however seemingly unconnectable — to translate every observable force into a predictable and measurable reaction. It is this behaviour that leads people to try to predict, for example, how the Greek crisis will affect Canadian oil stocks and come up with these thoughts:

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This article has 7 Comments

  1. Zebadiah W.

    People panic on the first sign of stock movement. This is normal because they have put their money into investments and expect returns immediately.

    This is why i decided to practice with online investing games before doing the real thing. The best advice — buy and hold.

  2. Jax

    Connecting the dots is what always has been. Even pros do it.

  3. Xaviar B.

    Greece gets a bailout today. For the 3rd time. We are walking on eggshells here.

    I doubt the euro union would ever let Greece default. So not sure why Greece signed the dotted line.

  4. Darrel M

    It's all random.

  5. Jacoby Kellum

    The world IS connected economically. The article downplays that in parts. 🙁

  6. Coy G.

    Ahh so do nothing, huh? That is easier said than done.

  7. Gianni B.

    Yea, yea, so what are the best stock picks? 😀

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