Recently, I heard the most outlandish thing, ever: Donald Trump would become President of America on 20 January 2017.
Wait, no, that's not it, I heard a professional money manager, with millions of dollars under his/her control, say that Australia's S&P/ASX 200 (INDEX: ^AXJO) (ASX: XJO) will hit 10,000 points within five years. Better yet, the bull case is 15,000 points!
Yeee haaaa!
Here is what that looks like graphically:
Who said this?
I am not going to name names here because I would rather not butter this person's bread. But let me tell you, they are no less than a CEO of an ASX-listed company and an 'intellectual' of sorts. Yes, this person actually manages people's real money.
He could be right!
I'll admit the S&P/ASX 200 could hit 10,000 in five years. In fact, I hope it does.
After all, it would 'only' require a 12% annualised return from here to get the S&P/ASX 200 to 10,000 points in five years and roughly 21% to get it to 15,000.
Heck, Marc Faber (a.k.a Dr Doom) believes the Dow Jones Industrial Average will hit 100,000 — it is currently 19,950.
So how bad can it be?
I'm not here to slag on Looney Tunes, either. But you should always take a breath and critically analyse every investment thesis. It's not hard to make a crazy statement sound appealing…cough…cough, Trump.
And the thing is — it works for these people!
It makes their listeners, viewers or readers feel comfortable.
But when this particularly person had their ASX 200 forecast questioned, they did what too many 'professional finance people' do and chucked in a whole heap of jargon, to try and confuse their audience:
"Technicals"
"Fundamentals"
"Risk"
"Proprietary"
"Resistance"
"Algorithm"
I have had the privilege of meeting with teams of wicked-smart fund managers with supercomputers and tools that blew my mind, so let me tell you this manager's forecasts appear very loose.
Foolish Takeaway
This little rant goes out to all investors who have got swept up in the marketing gimmicks of charlatans and doomsayers who are just taking advantage of your lack of understanding. It's one thing being wrong (which I am — very often) but it is another thing to completely misguide people.
Unfortunately, it happens far too often in Australia. It is little wonder finance was voted the most untrustworthy industry in 2016 by the Edelman Trust Barometer.
Please, don't be fooled by everything you hear and read in the media. Sure, keep an open mind. But be critical and learn from those who have gone before you.
I have never found a sustainable get-rich-quick scheme — only get-rich-slowly schemes.
