The Futility of Fortune Telling (and Stock Price Predictions) - 2021-12-27

I've noticed a trend on Xueqie (雪球) – some bloggers act like gambling kings, confidently predicting exactly how high a stock price will climb. This kind of forecasting falls into one of three categories:

  1. Paid Pumping: Someone is paying them to artificially inflate the stock's price.

  2. Heavy Bag Holders: They've bought a ton of the stock and are trying to talk it up.

  3. Plain Foolishness: They're genuinely mistaken about their ability to predict the market.

Regardless of the reason, Warren Buffett and Charlie Munger have consistently taught us that no one can reliably predict stock prices. So, if someone claims they can, you know they fall into one of the above categories.

This reminds me of a passage in the Bible. Even Jesus said he didn't know when he would return, and he cautioned against making such predictions. Yet, throughout history, many evangelists have done just that, especially after gaining fame. It's baffling. Why ignore such a clear directive?

I read these bloggers for their reasoning and analysis, but I completely disregard their price predictions. They're just noise.

This whole thing reminds me of a story my friend told me about a fortune teller in Thailand. When she was young, her mother took her for a reading. The fortune teller, with great confidence, declared that she would marry, and it would be either "near" or "far." Now, let's be realistic even if she did marry, what does "near" or "far" even mean? Is a one-hour drive "near"? Is a two-hour flight to Singapore "near"? The fortune teller's statement was so vague it was essentially meaningless. And the kicker? My friend is now in her 40s and still single! I bet if she went back, the fortune teller would have some new, equally ambiguous prediction, covering all possible outcomes. "You will marry soon... or perhaps later... or maybe not at all!" That way, they can never be wrong.

The stock market is the same. No one can predict prices with certainty. If someone tells you they can, just walk away. They're either trying to manipulate you, deluding themselves, or both. Don't fall for their fortune-telling tricks.

Predictions are free except for fortune teller, and if they’re wrong, it doesn’t really matter—no one will remember in a few months anyway. The best predictions, though, are the ones that take years or even decades to prove, keeping the mystery alive and making you look like a visionary if they ever turn out to be right!

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