Throughout the year the financial news is a constant in my daily life. Even on vacation I will sneak a peak at the stock info scrolling at the bottom of a tv screen while sitting in a restaurant. The various CNBC shows are the soundtrack to my life.
But come August I can’t help but get inundated with sporting news. Football is back. And the football pundits are making their predictions.
Have you ever noticed how the pre-season football rankings rarely resemble the final results? Seems like every year there is a preseason top five team that drops off the Top 25 list by the end. And an underdog comes out of nowhere to rise near the top.
But the same thing can be said about the financial news often as well. Some years there are predictions of great things for the stock market only to have it flat or down. And the drum beat of negative news other years can be completely ignored by the stock market. We can look at the track record of various stocks, mutual funds and ETF’s and try to predict their year-end result, but rarely do the experts have their stock market guesses pan out exactly as predicted. And just as in football we may see an underdog rise to the top, baffling the “experts.”
And just as when sports writers jump on a team bandwagon opinion only to be wrong, many times you will hear a stock market consensus get disrupted by reality. That is why I always like to look at the contrarian position whenever market sentiment is lockstep in one direction. So if the Cleveland Browns make the Super Bowl we will have to reconsider the current positive market outlook consensus.