New rules, a new book, and new forecasts

Predictions are interesting. But for investors, they're probably best left alone.

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The second last Friday before Christmas. I don't know about you, but it really feels like it, doesn't it!

Don't let them change the rules

I posted an article (and sent an email) this morning about the potential for some changes in financial advice that would likely, in my view, increase the risks for consumers.

If it's recommended and implemented, it would remove the requirement for financial advisors to act in the 'best interests' of their clients. Which begs the question 'If they're not acting in our best interests, what are they doing?'.

Precisely.

I'll have more to say if and when the government considers such a recommendation, but this is something you need to know about.

We need to make sure the government knows we want advice to continue to be in the 'best interests' of clients.

It's staggering that I even have to type that. But 2022 has been one of those years, huh?

Some great holiday listening (and reading!)

A quick plug, here. You probably know we produce two podcasts: Motley Fool Money and The Good Oil.

The most recent episode of the latter is a ripper.

I spoke with long time business journo, Michael Pascoe.

But it wasn't just a business chat.

He obviously has a sharp business and policy mind, and it was fascinating to get his take on where we've been, where we are, and where we're going.

But he's also written a book, recently. A memoir of sorts, it's a cracking read and a book I highly recommend. So, if you're looking for something to listen to, and then something to read, check out my chat with Michael on The Good Oil, then buy his book (he reads the audiobook, which I reckon is even better), The Summertime of our Dreams!

And there are lots more great episodes already in the podcast feed, and more to come – so make sure you check them out!

'Tis the season

I mean yes, it's that season. But it's also the season for a phalanx of 'year ahead' articles.

And in financial circles that means forecasts.

Or, more honestly, 'guesses'.

"What will the economy do?"

"Where will the ASX be by next Christmas?"

"Will Elon go completely mad?"

Okay, that last one might not be a common question. But you get my drift.

And, of course, the only answer to those questions (yes, even the Elon one) is "I don't know".

I'm lucky, too. I work for a business that lets me say 'I don't know' without fear of losing my job.

Predictions are interesting. But for investors, they're probably best left alone.

For my money, your time is better spent not predicting, but preparing.

Making sure your financial circumstances are flexible enough to allow for a range of possible outcomes. And that your portfolio is designed similarly.

If you have a truly long term perspective, that's also very helpful – meaning you don't have to make a series of short term predictions, hoping you'll be right.

I own a group of businesses that I hope will be more profitable in five years' time, and at prices I hope will go meaningfully higher over a similar timeframe.

That's it.

What will happen on the ASX next year? To quote the great John Pierpont Morgan, "It will fluctuate".

Quick takes

Overblown: Speaking of predictions… I don't make them, but I do think most things tend to 'mean revert' – that is, they tend to be cyclical around an average, and tend to head back toward average over time. If I was a betting man, I think that'll happen with oil, gas and coal prices, over time. I think these high prices will be, with hindsight, an aberration. We need to help some people deal with the impact of high energy prices. But I don't think it'll be a long term issue.

Underappreciated: It's hard to say that something which gets national headlines can be 'underappreciated', but I'm not sure most people realise just how incredible 3.4% unemployment really is. 64,000 jobs created last month, highest participation rate on record, and almost anyone who wants a job can get one (with obvious exceptions). The economy has problems, and the future is uncertain, but this unemployment result is truly exceptional.

Fascinating: This week alone, we've seen reports of breakthroughs in nuclear fusion, computer chips to help paralysed people communicate, and a Harry and Meaghan documentary. Two out of three ain't bad? (Seriously, though, while the headlines are focussed on the big daily things, life keeps getting better and better, in labs and offices around the world. Stay optimistic!)

Where I've been looking: I pick stocks for a living, but recently we launched an ETF-only service for those building an ETF portfolio or who want to use ETFs as a portfolio cornerstone. I've been spending a bit of time this week looking through the growing list of options. There are some really great ETFs. And some that give me the sense that the providers seem to be taking the… mickey. Just remember not all ETFs are the same. (And, shameless plug: the service is very, very cheap. Join us at fool.com.au/join-etf-investor But also, read all the Ts & Cs on the site etc etc)

Quote: "Pundits forecast not because they know, but because they are asked." — John Kenneth Galbraith.

Fool on!

Motley Fool contributor Scott Phillips has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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