Investing in an Age of Prediction Overload
“Wall Street Expects the Market to Keep Rallying in 2026 Despite Lofty Valuations.” “Oil Prices and Stocks Inch Up as Investors Weigh Jobs Data and Gulf Stalemate.” “A.I. Populism Is Here. And No One Is Ready.”
The financial media is rife with predictive headlines. Everywhere investors look, there are forecasts, warnings presented with precision, and bold claims about the future. Social media, AI tools, and algorithmic content push these narratives and amplify certain voices that are not always the most reliable ones. After all, financial media rewards confidence, not accuracy. In an election year, policy predictions are brought to the forefront, and there is no doubt these headlines will increase in frequency as we inch closer to November and then begin again as soon as the results are known.
There are entire markets built on predictions, with companies such as Kalshi and Polymarket luring in unlikely prediction-market participants with a chance to win big by “trading on anything.” These companies market to younger users, selling the potential of upside by predicting the outcome of a future event. While they have not proven to be profitable endeavors for most users, save a select few sophisticated traders, they do capture public sentiment and can effectively forecast certain economic trends. Some of these forecasts will be directionally useful, some will be wildly wrong, and most will never be remembered.
True long-term wealth is rarely made by correctly guessing the next headline or who will win Survivor Season 50, an actual current market on Kalshi. All investors make predictions about the future to inform their decisions. After all, why would you invest in the stock market if you didn’t predict that over a long-time horizon it would increase in value? We use 10-year return assumptions when projecting capital market returns in our modeling. These predictions are a necessary and useful component of our planning work and can help inform our clients when it comes to making long-term decisions. The challenge for investors is not whether to use forecasts. The challenge is knowing how much weight to give them. A forecast can inform a plan, but it should not become the plan.
Forecasts can be useful in helping to frame possibilities but become dangerous when considered a certainty. Investors want clarity, and forecasts provide an illusion of control. Instead of trying to guess exactly what will happen next, investors may be better served by asking what they can afford to have happen next.
It is almost always better to be approximately prepared than precisely right because even correct predictions can lead to poor decisions. A diverse portfolio that properly matches assets to time horizons provides a resilient framework informed by planning instead of forecasting. It would be impossible to build a financial plan that depended on surprises never happening. Predictions will continue, some useful, some forgotten, but a thoughtful strategy will preserve our families’ wealth well into the future.
Meghan Potter