“Prediction is very difficult, especially if it’s about the future.”
This time of year is rife with sweeping predictions about the future of economies and, more specifically, stocks. Sometimes the predictions extend far into the future. Whether for one year or ten, these predictions are normally “grounded” in the fundamentals and make pretty
compelling comical reading… but won’t usually do much for your account balance.
I saw this recent post by Barry Ritholtz harkening back to a sweeping prediction made in 2000. Fortune magazine suggested 10 stocks to buy and forget (i.e., buy and hold). The analysis seems to forget to take splits into account in a couple of places, but the gist is still the same. Instead of regurgitating here the post here, we will just post a couple of the charts… and let them do the talking.
Note: The article gave closing prices as of August 14, 2000 and December 19, 2012. We would include Enron (8/14/2000 close $73) in the charts, but it went out of business and thus the chart is no longer available (so last close $0).
At any rate… take a look at the monthly charts for some of these names.
Nokia — NOK
Broadcom — BRCM
Charles Schwab — SCHW
Morgan Stanley — MS
So what’s the point? Wall Street, brokers, your parents, your friends… they will all tell you that you can’t time the market. But look at those charts again… now what if you could?