As we look ahead to 2025 there will be more of a spotlight in the financial press about what lies ahead for the economy in the next year. They are appealing articles to have from a newspaper's standpoint – it's human nature to want some sort of insight into the future – especially if there are implications for getting us closer to reaching our goals. The theme goes something like this:

"Is now a good time to invest in the market?"

It's the question that built the investment industry – the idea that there are good times and bad times to be invested in the market – and someone with dominion on the subject can sort it out.

In my 14 years on Bay Street, I’ve heard it all, one line repeats itself over and over again ‘it’s better to have a wrong opinion, than no opinion’. 

We’ve all heard the question – so let’s see if we can unpack this question and put it into context around how this question is too often answered:

"What are the experts saying?"

It is a good place to start. So, we think of what a leading economist had to say recently in an interview, but not just any leading economist – we want to quote the best economist. The best economist probably earned their math degree at MIT and their MBA at Harvard, has access to immense data sets and is well researched in what they do.

Bonus points if they ‘called 2008’ or something - quote that person for sure.

So, we start repeating what they said on their recent interview and eventually come up with a black or white conclusion of either 'yes – it is a good time to be in the market' or 'no it is not'.

The more elaborate the story is, the more engaging it is – and the finance industry is great at making elaborate stories. With all the fun we're having telling these stories and listening to them, we often miss the more important questions.

Does this information matter?

As much as we all want it to matter, the reality is no. For one, nothing is black or white / buy or sell when it comes to managing wealth.

Further, study after study has shown that economist predictions are often so wrong, that they are statistically useless when looking back and evaluating their accuracy.

But we know there are hacks out there – what about the good ones? Well, studies have also found that while some make bold predictions which turn out to be correct, many of those 'correct' economists show little to no ability to be accurate again. Were they ‘correct’ with that one, drastic prediction, or just a participant in a large sample of market predictors whose turn came up?

We all love the opinions of "experts". Hearing a world-famous chef like Gordon Ramsey speak about food could have audiences captivated for hours on end; an economist – especially one who 'called crash of 2008' is no different.

The problem is the environment is different. Cooking is a skill that can be applied for repeatable results.  It’s finite in nature – the same ingredients + the same process = the same results.

The economy and the stock market are imperfect and don't yield repeatable results. What happened before was under a different situation with different rules – in contrast, they are infinite.

So, while the genius economist would likely have an engaging TED Talk with Gordon Ramsey charisma – much of what they say far more than likely isn't going to come close to happening.

Does the question matter?

We know that the results of economists are quite often wrong, yet we insist on having these conversations. Think of the average person sitting at home, watching the news, and who takes part in these conversations – how likely is it that they will not be tempted to turn their long-term goals into a series of very short-term decisions?

The presupposition in all of this is that the only context is the short-term – next 12 months.  If you are saving for something in the next 12 months, the market is not the place for you.  The longer the time period, in conjunction with a properly created plan and risk profile – the more we come to realize that 2025 will be just as unpredictable as any other year.

We ask the Wrong Questions.

‘Is now a good time for you to invest in the markets?’ Is a vastly different question.  It’s implied when asked, though seldom is the answer phrased to their audience.  What money are you investing? Are you investing money you need soon, or later? What’s your experience been like investing so far? What are your thoughts on risk? What will happen if the investment goes up?  What will happen if the investment goes down?  What won’t happen if the investment goes up?  What won’t happen if the investment goes down?

A realistic view.

The investment industry consistently markets itself as knowing when to buy and sell, zig and zag.  They have shown no ability to do so in any way outside of luck, academia has proven this time and time again.

It just doesn't work that way in real life.

Is now a good time to invest? If you know why you are invested and what you are invested in is aligned with your goals – it is almost always a good time to be in the market, just know that the next 12/60/120 months can have positive returns or negative returns.

Let's take that initial question "is now a good time to invest in the market?" and invert it – "when is it a good time to not be in the market?" For someone with a properly laid out financial plan with an investment strategy that is congruent with that plan – the answer is never. Otherwise, this is timing the market dressed up as insights.

Over the long-term, we can continue to expect the economy as a whole to grow, the individual companies that make up the economy can be expected to grow as well. Nobody knows which ones will grow more than others, seriously, nobody knows.

As the calendar flips into 2025 and these conversations start coming out – ask yourself ‘if he or she is right, how come they are not making $10M per year that any major asset management firm would gladly pay them for their market predicting abilities?’

But hey, ‘it’s better to have the wrong opinion than no opinion’, right?