Financial Forecast Advice

The financial press is littered with crystal balls and stock predictions. Should investors be following this advice? Eric Schurenberg offers a forecast of his own.

Eric Schurenburg: Walking past a newsstand I'm struck that everyone but me seems to have a crystal ball. Every magazine wants to tell you what investments to buy. My favorite though was the one magazine that promised to tell you the best investments for the next decade, whole decade. Who wouldn't want to know that? Especially when this story had forecasts from some of the smartest market people I know including Jeremy Grantham, Rob Arnatt and Bill Gross, all of whom you've encountered here on CBS Money Watch. But you can guess how this will turn out. The story would have done you no good at all. The wise men agreed on nothing. You could pick one of them to follow but you'd have no idea which was going to be right. And here's the thing. Suppose you did pick the one winner. Would you have so much faith in his predictions that you'd stick with him for ten years? You could be sure there would be periods during that time when he would look like an idiot; chances are he wouldn't be able to stick with his own predictions that long. Look, we humans are wired to listen to anyone who's got a confidence to take on the future; even if we know intellectually that he can't possible know what's going to happen. I call it the prediction affliction so I'll make a prediction. The best investment for the next decade will be as it usually is a diversified portfolio that has some U.S. and foreign stocks, some U.S. and foreign bonds and some cash. It won't be the hottest portfolio but it will have some of the hottest assets in it; and more important because you won't have to second guess it. It will be something you can stick with for the long run. And in the long run that's what matters.