2025’s Stock Market Shows the Danger in Predictions

“The forecasts may tell you a great deal about the forecaster; they tell you nothing about the future.” This classic line from investing icon Warren Buffett constantly reverberates through the minds of the team at Blueprint Financial Advisors. But it reached a crescendo earlier this year as we – and you – witnessed the chaotically turbulent start to 2025.

If we were to summarize that same Buffett quote in our own words, it would be this: Predictions can be dangerous. When investors base their financial decisions on the predictions of “experts,” they put roots into sandy ground because analysts and economists actually have no idea what is going to happen. Plus, mixing ego with intellect in the form of a prediction can be a toxic brew for investors who dare follow the forecaster down that path. The future is unknowable!

The Future is Unknowable – 2025 is Case In Point

Less than a year ago, in December, the S&P 500 Index was making new highs and international stocks were getting crushed by their U.S. counterparts at a historic margin. Within 100 days, the benchmark large-cap index met the mainstream definition of a bear market by falling more than 20% from its previous high. Further, stocks abroad – particularly those of developed countries – flipped the script and enjoyed a strong start to the year in the midst of the domestic decline.

In recent months, U.S. stocks have rebounded from their April lows. However, they are just now approaching the 2025 forecasts originally hypothesized by pundits in late 2024 and early 2025.

Prioritize Process, Not Prediction

For many mainstream investors, 2025 has been a nerve-wracking year, causing them to long for the steady trends of 2024. We also miss those low-volatility periods. However, times like this year also offer a concrete example of why we feel so strongly about using a systematic investing process when managing portfolios for our clients.

Systematic investing, which is also known as trend following, can design portfolios that are prepared for all scenarios: those that look like 2024, the first half of 2025, and whatever is to come.

The headlines and circumstances will change, but the portfolio is built to adapt accordingly. In fact, each month we share an update about how our portfolios are changing based on market conditions.

Whatever the markets do, it will be business as usual for us: ignore the talking heads, follow the plan, and keep our clients on the path to reaching their long-term goals.