As a stockpicker, what’s your investment horizon? If you answered, “one year”, please see us after class. If you need anything in equity markets to come good in so short a period, you’re setting yourself up for a fall. Otherwise, it seems as though you’re implicitly claiming to have found the magic formula everyone’s after: where prices are heading.
Perhaps you have. After all, investing wizards do occasionally come along. In which case, do please see us after class to discuss your ideas.
Point is, your guess about where markets – let alone individual stocks – will trade in a year’s time is as good as any. Yes, financial professionals like to talk about how annual equity returns typically average between 7 and 8 per cent. But very rarely does a year in markets neatly align with this long-term compound figure; frustratingly, we often must make do with lower returns and the odd disaster, as well as the occasional super-year.