August 15, 2025
Click bait. They’re just guessing. Ignore…
For 50 years, I have been reading forecasts. Forecasters taught me that forecasts are really just educated guesses. Well meaning, well-reasoned, but ultimately, they should all come with this introduction:
“Assuming things stay the same…” But they don’t, do they? As the saying goes, it is what you don’t know you don’t know that gets you in the rear end.
Study from The Wharton School at Penn, 2001-2017:
“Another important point to mention is that, when analyzing the returns boxplots, it’s clear that the median of Cramer’s recommendations is close to zero in all of the different periods, which indicates that these recommendations, in general, do not bring significant returns for those following them.”
That from this article below analyzing 2016-2022, if you want to really get in the weeds. Luis is an AI data researcher.
https://medium.com/@luuisotorres/jim-cramers-recommendations-a-six-year-analysis-e8a59675135e
Well, if you Google Jim Cramer you get 19,900,000 hits. If you Google Anthony Gallea, you get 28,000 hits. Just to say my work was better than his but it goes to show you that not only is life unfair, but it’s the entertainers that get all the hits.
Now he does serve a valuable function. He helps people understand markets, he does make it accessible (haven’t watched in years, don’t know if he still has the bells and oogah horn…wish I had thought of that). He’s an earnest professional with flair and a very smart guy. Credit where it’s due.
Here we have Cathie Wood at ARK, on TSLA, which is 10% of her flagship holdings: (FYI, TSLA trades currently @ $342.)
March 2025 “Cathie Wood is doubling down on Tesla and not in a small way. In a fresh interview with Bloomberg, the Ark Invest founder reiterated her bold $2,600 price target for the EV giant over the next five years. That’s nearly a 10x leap from current levels. The real driver? Not electric cars.”
Motley Fool June 2025:
“Around 2022, Cathie Wood and Ark Invest forecasted Tesla stock could surge to around $2,600 within roughly five to seven years, driven predominantly by autonomous robotaxi operations. This forecast represented a near 10x increase over 2022 stock prices and required successful deployment of Tesla’s full self-driving and robotics technologies.”
At the current price of $342 it would be a pole vault loop-de-loop of historic proportions to get to her target. But if I have this right, she just did a clock reset. In 2022, 5-7 years would be 2027-2029. Today, five years is now 2030. Given my age, that might head out toward my own expiration date, so I’m not going to follow her in.
To be clear, I am a great fan of Elon Musk, but like Bezos, we don’t want him moving to France.
So here is what the stock has done since 2022. Let’s call it a dead heat although there was a spike in volume at the $420 top and at the $150 bottom which affects average cost:
I find my excitement in running race cars around a race track. I dunno, feels safer to me.
But this illustrates The What If She’s Right? factor. The fear of missing out (FOMO) drives an incredible amount of investment selection. People think…” I’ll just buy a little bit, at least get the chip down on the table.”
In April we all witnessed an explosion of angst and anxiety among forecasters about the effects of tariffs on the markets. What I found notable was first, that no one really knew what was actually going to happen. And then, the conclusions they reached featured eyeballs on fire with inflation forecasts. And then a kind of consumer-dead-man-walking thing where consumers were expected to eat it all. Never mind you and I shop around a price increase and buy a substitute.
Anyway, here’s what the S&P 500 did. The low on April 7 around 5,000 coincided with tariff hysterics:
Well, a number of forecasters in April forecasted the market would go up. Deutsche Bank, unfortunately, forecast another 400 point drop to 4600 before market steadied. That at least froze Deutsche investors in place, had they listened. Worse if nerves jangled and they sold.
Current projections for 12-month S&P 500 returns range from a high of +18% (Oppenheimer) to a low of -26% (BCA, forecasting a recession).
I just mention that BCA is a Canadian firm. You can connect dots.
But you know what? That range covers the broad statistical bell curve and so doesn’t really impart any useful information. Someone will be really right, and someone will be really wrong, and most will be sort of right and sort of wrong but no forecasting felonies.
So, what is an investor to do?
We will get into more of this as we go, but for now, a couple of simple ideas:
Beware the tendency to trigger when a forecaster aligns with your view. If you think the market is going down, you may be right or wrong, but so is the forecaster who is making an educated guess. Remember that other equally qualified people will have the opposite view.
Remember that what you want is to read people who disagree with you. They test your assumptions. Take your pick:
Always be aware that inevitably, most financial forecasters have a business to feed. There is a purpose to what they are saying and it can often bias their commentary.
In sum, be a thinking consumer of the opinions you see and read. Be a skeptic and pay attention to the underlying assumptions. Cathie Wood has an opinion on TSLA but note that it “required successful deployment of Tesla’s full self-driving and robotics technologies.”
Put another way, anything is possible given a selected set of assumptions.
I always welcome thoughtful feedback. If a particular piece resonates—or raises a question—I’d be glad to hear from you. You can reach me directly at anthony@workingprofit.com
