“Forecasts may tell you a great deal about the forecaster; they tell you nothing about the future.” Warren Buffett

Bill Miller, CFA, is the founder of Miller Value Partners, and currently serves as the Chairman and Chief Investment Officer. His fourth quarter 2019 Market Letter released 13 January 2020, to clients is loaded with useful insights for investors and followers of the financial markets. The letter has been discussed thoroughly by financial pundits and the financial entertainment media.

Market forecasts delivered by economists and the financial news entertainment media pundits on networks, such as CNBC, are rarely useful or insightful or accurate.  Bill Miller cited in his letter that “…the future is not forecastable with any degree of granularity”. 

The method most forecasters use is either to follow the consensus or to “believe that tomorrow will look pretty much like yesterday.”  He further mentioned that “one of the 20th century’s greatest economists, was once asked how far into the future a good economist could forecast”. He quipped: “One quarter back.””

“Short-term market forecasts are poison and should be kept locked up in a safe place, away from children and also from grown-ups who behave in the market like children.” Warren Buffett

Essentially, no economist or financial guru can accurately or reliability forecast the market’s direction (rise, flat or pullback) or its relative velocity of change. Despite their self proclaimed vast financial experience and inside knowledge of the inner workings of equity stock markets, the sophisticated financial tools available to them, and their early access to market news, they remain unable to reliably forecast the market.

Miller concluded in his letter that, “stocks will not move in a straight line higher even if the bull market continues in 2020, as I believe it will.”  He stated that,  “setbacks and corrections should be expected, but unless something causes the economy to tip into recession and earnings and cash flows to decline, which I do not expect even if the geopolitical situation gets grimmer, then the path of least resistance for stocks remains as has been for a decade: higher.”

To read the entire letter, go to:  Bill Miller 4Q 2019 Market Letter

Sources:

1. https://millervalue.com/bill-miller-4q-2019-market-letter/
2. https://www.evidenceinvestor.com/warren-buffetts-advice-investors-25-quotes/