Are Financial Predictions Too Risky For Investment Commentary Writers? by The Finance Professionals’ Post
Is it a bad idea to make predictions in your investment commentary because clients will slam you when you’re wrong? Whenever you make predictions, you run the risk of being wrong. But being wrong isn’t a problem, in my mind, if your prediction reflects good thinking.
Lesson from my winning prediction
Accurate predictions alone don’t make you seem smart. I remember the time I participated in a betting pool with members of an investment policy committee. I had to predict where a certain number—probably the 10-year Treasury rate—would be one quarter later.
Alluvial Fund performance update for the month ended May 2021. Q1 2021 hedge fund letters, conferences and more Dear Partners and Colleagues, Alluvial Fund, LP returned 5.4% in May, compared to 0.2% for the Russell 2000 and 1.0% for the MSCI World Small+MicroCap . . . SORRY! This content is exclusively for paying members. SIGN UP Read More
Guess what! I won. However, it wasn’t knowledge of Federal Reserve policy or the economy that inspired my winning bet. It was that I deliberately picked a rate 25 basis points lower than any other committee member’s bet.
Did I respect the losers less after I won my bet? No. They had well thought-out ideas about the factors driving bond yields. As a result, I continued to think highly of them.
The lesson is that smart people can and will be wrong. After all, look at any major investment firm’s quarterly predictions of statistics such as the fed funds rate, gross domestic product (GDP) growth, or the consumer price index. Most of the time they are wrong. Heck, the federal government revises its GDP numbers as new data comes in.
Why you should make predictions
Investment commentary that only reports facts is often boring. Plus, unless you’re pumping out commentary instantaneously, you’re not telling your readers anything they couldn’t learn online or in The Wall Street Journal. They have no reason to read your factual, unopinionated commentary.
Keeping your clients interested isn’t the only reason to make predictions—or, at a minimum, express opinions. When you support your predictions with carefully reasoned arguments, you give clients insights into your firm’s thought processes. That’s valuable.
Imagine, for example, that you predict that the Federal Open Market Committee will boost its fed funds target later in the year. By itself, that’s not so interesting. What makes it valuable is why you think that’s true and what you recommend based on that prediction.
Unexpected events—war, natural disasters and the like—can sabotage your predictions. However, they may only delay your predictions coming true. Clients will find comfort in the soundness of your thinking.
See full article here.
Financial Blogging: How to Write Powerful Posts That Attract Clients – Description
Blogging has become a “must” for many independent and fee-only financial advisors. It’s a great way to build your business by connecting with current and potential clients as well as referral sources. Blogging attracts prospects to your website, media attention, and speaking engagements. It also cements your reputation as a leader in your field. Savvy investment managers, wealth managers, and other financial professionals know blogs are an excellent way to communicate topical information before it gets stale. This deepens your relationships with current clients. But many advisors struggle to create a steady flow of compelling blog posts. This isn’t surprising. After all, your professional training focused on helping clients manage their investments or finances. You may have never taken a writing class or written for publication. Don’t worry! Help has arrived. This book will help you conquer the challenge of producing high quality blog posts by following a step-by-step process, including how to: Generate and refine ideas for blog posts that will engage your readers Organize your thoughts before you write so you can write more quickly and effectively Edit your writing so it’s reader-friendly and appealing Spread the word about your blog and attract more visitors
Financial Blogging: How to Write Powerful Posts That Attract Clients by Susan B Weiner CFA