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Market Forecasts—Helpful or Harmful?

Headlines are often filled with market and individual stock predictions. Our consultants give ideas on what to do with them (Hint: nothing).


Key Takeaways

Investors get bombarded with market news and predictions for the next year, the next quarter and even the next week.

The good news about market predictions and news is that they can be informative. The bad news is that they can make you want to take action.

Our consultants discuss how understanding market forecast sources, keeping the proper focus and having a plan can help you react appropriately.

It happens right before or at the start of a new year. Headlines are filled with predictions about what the markets or a particular stock will do. How should you view these forecasts? Financial consultants Trey Byrd, Josh Freeborn and Duo Tran give their top three tips for keeping perspective when prophesies for the new year—or anytime—roll in.

1. Understand the Nature of Market Forecasts

You can find market forecasts just about anywhere, from watching financial and nonfinancial news to all over your social media. Should you listen? Our consultants say a key is understanding what you’re hearing and from whom.

“Market forecasts can be educated guesses and can be right for a couple of weeks,” says Duo. “But they also can be limited to one person’s point of view at one point in time.”

Josh agrees and says it’s essential to understand who’s giving the prediction. “Are they selling a book or trying to make a name for themselves? You may ask yourself, what’s in it for them?”

The question may be who’s reliable. Our consultants say if you’re unsure, go to the source of the financial information and review it yourself. They suggest examining government websites, such as articles from the Federal Reserve or data and statistics agencies like the U.S. Bureau of Labor Statistics. Another source may be the financial companies you work with (and have already chosen to trust with your money).

Perspective vs. Prediction

Nearly all financial companies provide outlooks and market commentary for their clients. How’s that different from what you hear in the news? For the most part, your financial company offers education and points of view so clients understand who’s managing their money and how.

American Century Investments’ chief investment officers (CIOs) do the same every quarter, but it’s not a crystal ball, nor is it marching orders for you. Investment Outlook aims to educate investors about our teams’ perspectives based on economic trends, world events and scads of market data. The CIOs may also tell you where their teams are looking for opportunities for the strategies they manage and why. It’s part of helping you understand their rigorous process to actively manage those portfolios.

Can it help investors get ideas for their portfolios? Yes, but they still need to weigh them against their own goals.

2. If You Listen to Financial Forecasts, Don’t Act

The good news about some market forecasts is that they can be informative. There’s nothing inherently wrong about hearing different perspectives. However, it can be bad news if you’re tempted to act on the information without knowing if it’s right for you.

How can you avoid reacting? “Keep a long-term view of your investments,” says Trey. “And make sure you stay diversified.” Diversification gives you a broad mix of investments that don’t all react the same way in a market event, and it can help manage risks in your portfolio.

Our consultants understand that a long-term perspective can be challenging if you think you might miss an opportunity or fear losing money. A key is knowing whether the action you want to take aligns with your goals and your risk tolerance. All agree that “stay the course” may be some of the most difficult words for an investor to hear.

The Benefits of Not Reacting

Not reacting to news and predictions may help you avoid hasty decisions that have long-term consequences. Our consultants know people who chose to act at the wrong time—and have long-term regrets.

“Last year, some people moved to fixed annuities because of inflation fears,” says Duo. “Of course, everywhere you turned, it was all bad news, and I can understand wanting to make a change. But in doing so, they missed out on the rally we experienced at the end of 2023.”

Josh says it was the same in 2008. “So many people were hearing about the doom and gloom that they got scared and moved to cash. Unfortunately, they missed out on the rebound that came later. I have clients who still regret those decisions.”

Consider Talking to a Consultant

If you’re tempted to make snap decisions based on headlines or predictions, our consultants say to talk to someone first. “Talking it over with an advisor can help you refocus on what you’re trying to achieve versus what you’re hearing in the news,” says Duo.

“I start by asking clients what they’re trying to fix,” says Josh. “From there, we can get to the heart of what prompted them to call.” When you revisit your goals and the original reasons you chose to invest, it can help you keep perspective.

Tune It Out

Another suggestion? “Turn off the news,” says Trey. “If it’s making you nervous or wanting to change things in a snap, it’s better not to listen.”

That can also be difficult to do these days. News, data and opinions are coming at us from so many places that it can be hard to ignore. A better option may be to talk to an advisor to help you focus on your goals.

3. Choose a Plan Over Market Predictions

A final tip from our consultants is to have a financial plan and choose to stick to it rather than being swayed by today’s market forecasts.

“If you have a good financial plan, it doesn’t matter what the talking heads say,” says Duo. Musts for your plan? Make sure that your investments match how much risk you’re realistically willing to take and your portfolio is appropriately diversified.

A plan can also help you stay consistent with your investments and may help you tune out the extra noise from headlines. “A financial plan can give you confidence because you know you went through the steps of figuring out your goals and which investments are the right ones for what you want to achieve,” says Trey.

Should Your Plan Change—Ever?

Once you have a solid plan, don’t second guess it or yourself, say our consultants. But that doesn’t mean your plan is set in stone. There are reasons to change a plan, but they have nothing to do with market predictions. They’re about what you’re experiencing in life.

“Clients may want to make changes when they’re faced with something new, such as a big expense to plan for, or if they want to minimize the impacts of taxes as they get closer to retirement,” says Duo.

Josh agrees, “Plan adjustments should be about your life changes, not changes to the markets.”

How do you make a financial plan work in your favor? Trey says, “First, you actually need the plan. If people don’t know where to start, that’s what we’re here for.”


Financial Consultant Trey Byrd, CFP®
Trey Byrd, CFP®

Financial Consultant

Financial Consultant Josh Freeborn
Josh Freeborn

Financial Consultant

Financial Consultant Duo Tran, CFP®
Duo Tran, CFP®

Financial Consultant

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The opinions expressed are those of American Century Investments (or the portfolio manager) and are no guarantee of the future performance of any American Century Investments' portfolio. This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.

Diversification does not assure a profit nor does it protect against loss of principal.

Investment return and principal value of security investments will fluctuate. The value at the time of redemption may be more or less than the original cost. Past performance is no guarantee of future results.