A New Year's resolution every investor should embrace
- Robin Powell
- 1 hour ago
- 9 min read
The start of every year brings a fresh barrage of market predictions, each more confident than the last. Here's a New Year's resolution worth keeping: ignore it.
Check the weather forecast for tomorrow and you'll get useful information. Check it for next August and you're wasting your time. We understand this instinctively. Nobody cancels their summer holiday because February's long-range forecast looks uncertain.
Yet something strange happens when intelligent people turn to financial markets. The same person who sensibly ignores a three-month weather prediction will rearrange their entire investment strategy based on some strategist's pronouncement about what stocks will do next quarter.
This is the noise. And it never stops.
Right now, the 2026 prediction machine is running at full speed. Recession risk. Stagflation warnings. Equity bubbles about to burst. Geopolitical flashpoints from Taiwan to Ukraine. You've seen these headlines. They sound plausible. They sound urgent. They're delivered with confidence that demands attention.
But here's what the prediction industry would rather you didn't examine: its track record. Research from CXO Advisory, tracking thousands of predictions from market gurus over more than a decade, found their accuracy rate was around 47%. Worse than flipping a coin.
The good news? You don't need accurate predictions to invest successfully.
Why 2025 felt so much worse than it actually was
The year started with optimism. It didn't last.
By March, tariff announcements from Washington had sent markets into a tailspin. The S&P 500 dropped nearly 19% from its peak. Headlines screamed about trade wars. Your portfolio, if you dared to look, was deep in the red.
Then came the AI anxiety. Was it a bubble? Were we about to witness another dot-com collapse? The companies driving market gains seemed increasingly concentrated. Too much money chasing too few stocks.
Inflation refused to behave. Interest rates stayed stubbornly high. Geopolitical tensions simmered from Ukraine to the Middle East to the Taiwan Strait.
And yet.
The S&P 500 finished the year up around 17%. The FTSE 100 did even better, rallying approximately 21% for its strongest annual performance since 2009. Emerging markets topped the pile. Short-dated, high-quality bonds quietly got back to doing their job after 2022's painful losses.
This was the third consecutive stellar year for global equities in a row.
David Booth, founder of Dimensional Fund Advisors, captured the disconnect in a recent LinkedIn post. The year "felt unusual because of everything we were worried about," he wrote. "But the market results? Pretty typical."
Look at the distribution of historical S&P 500 returns and 2025 sits comfortably within the normal range. Nothing unusual. Nothing unprecedented.
The gap between how 2025 felt and how it performed is the problem in miniature. Investors who acted on their anxiety likely missed the recovery. Those who sold in April, shifted to cash, or "waited for clarity" watched the rally from the sidelines.
The noise said panic. The evidence said stay invested.
Market forecasters are no better than weather forecasters — and often worse
Here's the thing about meteorologists: they have physics on their side. Atmospheric pressure, temperature gradients, satellite imagery, centuries of observational data. Their short-term forecasts are genuinely useful.
Market forecasters have none of this. They're trying to predict the collective behaviour of millions of humans responding to events that haven't happened yet. Many are brilliant. The task itself is impossible.
CXO Advisory spent years testing this. Between 2005 and 2012, they tracked 6,582 forecasts from 68 market "gurus" and graded each prediction against what happened. The result? An accuracy rate of 46.9%. When they averaged by guru rather than by forecast, the number barely budged: 47.4%.
The distribution of individual accuracy looked like what you'd expect from random chance. A bell curve centred on "no better than guessing".
Philip Tetlock, a psychologist at the University of Pennsylvania, ran an even larger study. Between 1984 and 2003, he collected more than 82,000 predictions from 284 experts across politics, economics, and international affairs. The experts barely outperformed informed non-experts. Neither group did well against simple statistical models that assumed tomorrow would look roughly like today.
The experts who performed worst were what Tetlock called "hedgehogs": thinkers with one big idea, one grand theory, delivered with absolute confidence. The media loves hedgehogs. Confidence makes for good television. But confidence and accuracy are different things.
Try this yourself. Search "2025 market forecast" or ask ChatGPT what experts predicted for the year. You'll find predictions of recession, predictions of rally, predictions of sideways drift. Some will have been right. Most wrong. And there's no reliable way to tell, in advance, which forecaster will get the next call correct.
This year's reasons to worry
Right now you'll find plenty of confident predictions of trouble ahead in 2026. The themes are familiar. The confidence is absolute. And if history is any guide, most of it will prove wrong.
Recession risk tops the list. The lagged effects of tighter monetary policy, we're told, are about to bite. Growth is slowing. Labour markets are softening. Some forecasters put US recession probability well above normal.
Then there's stagflation. Sticky inflation combined with stagnant growth. Central banks trapped between fighting prices and supporting activity. It sounds plausible. It sounds scary. It might even happen.
Equity valuations get their own chapter in the doom literature. Markets have priced in rate cuts, AI-driven earnings, and policy support. What if earnings disappoint? What if the AI boom turns out to be another dot-com?
Credit markets feature too. Private credit has grown fast, and analysts worry about hidden leverage and funding stress.
And the geopolitical section. Taiwan Strait tensions. A Russia-NATO clash. US political volatility. European coalitions wobbling. Climate tipping points accelerating.
Read enough of these forecasts and you'd be forgiven for moving everything to cash.
But there's always something to worry about. Every year produces a fresh crop of plausible catastrophe scenarios. Every year, confident voices explain why this time is different.
And every year, the market does what it's always done. Buyers and sellers come together. Prices adjust. Over time, equity markets have rewarded those who stayed invested through the noise.
The question isn't whether these 2026 risks are real. Some might be. The question is whether acting on them improves your investment outcomes.
The evidence says no.
Your brain is wired to listen
If tuning out noise were easy, everyone would do it.
There's a reason we pay attention to scary headlines. Evolution made us this way. Our ancestors survived by noticing threats. The rustle in the bushes might be a predator. The brain that ignored potential risks didn't pass on its genes.
This wiring served us well on the savannah. It's less helpful when you're checking your portfolio.
Financial media knows how to exploit this. "Markets plunge" gets clicks. "Markets do roughly what they've always done" doesn't. Alarming headlines trigger the same threat-detection systems that kept our ancestors alive.
And the forecasting industry has built its business model around this vulnerability. Confidence sells. Drama attracts assets. "We don't know what's going to happen" doesn't fill conference halls.
Notice the gurus who dominate financial television. They're not the hedging, probabilistic thinkers who say "maybe" and "it depends." They're the ones with bold calls and absolute certainty. Tetlock found this in his research: the qualities that make forecasters popular are inversely related to the qualities that make them accurate.
The media rewards confidence. Accuracy takes years to assess. By the time a prediction proves wrong, everyone's moved on to the next bold call.
So you're fighting on two fronts. Millions of years of evolution have primed you to pay attention to threats. And a multi-billion-pound industry has optimised itself to trigger those instincts.
No wonder tuning out is hard. But knowing why it's hard is the first step toward doing it anyway.
The case for tuning out financial noise
The best days happen when you least expect them. Usually when you're most afraid.
JP Morgan's research tells the story. If you'd invested $10,000 in the S&P 500 in July 2004 and left it alone for 20 years, you'd have ended up with over $70,000. An annualised return of 10.5%. Nothing fancy required.
But if you'd missed the ten best days over that two-decade period, your final balance would be under $35,000. Your annualised return would drop to 6.2%. Ten days out of more than 5,000 trading days. Cut your wealth in half.
Miss 20 best days and your return falls to 3.6%. Miss 30 and you're down to 1.4% — barely keeping pace with inflation.
Why is market timing so dangerous? Because the best days cluster around the worst days. Over the past 20 years, seven of the ten best trading sessions occurred within 15 days of the ten worst.
Research from Hartford Funds reinforces the point. Looking at 30 years of data, they found that 78% of the stock market's best days occurred during bear markets or in the first two months of a new bull market. The days that matter most for your long-term wealth arrive precisely when the news is worst, when the forecasters are most bearish, when every instinct screams at you to sell.
If you're out of the market because some guru convinced you a crash was coming, you're almost certainly going to miss the recovery.
David Booth puts it well: "What we see day after day, year after year, looks to me like the power of human ingenuity. Millions of people around the world go to work every day trying to solve problems, improve products, serve customers, and make their companies more valuable."
That's what you're investing in. Not a chart. Not a prediction. You're investing in the accumulated effort of millions of people creating value.
Markets capture that effort over time. The process doesn't stop because headlines turn scary. It didn't stop during the financial crisis. It didn't stop during the pandemic. It won't stop because of whatever dominates the news in 2026.
"Meanwhile," Booth writes, "the market will keep doing what it has always done, turning information into prices that draw new investors into the market."
A New Year's resolution you can actually keep
Most resolutions fail because they demand you do more. This one asks you to do less.
Tune out the noise. That's it. No complex strategy. No expensive software. No guru subscription.
Here's what that looks like in practice.
Stop listening to market predictions. From anyone. However credentialed. However confident. The evidence says they don't know what's coming. Neither do you. Neither do I.
Ration your financial news. Checking your portfolio daily doesn't make it grow faster. It makes you anxious. Once a quarter is plenty. Once a month if you can't help yourself.
Ignore dinner party opinions. Your brother-in-law's hot stock tip. Your colleague's theory about what the Fed will do next. Smile, nod, change the subject.
Focus on what you control. Your savings rate. Your costs. Your asset allocation. Whether you have a plan and can stick to it. These things matter. The rest is noise.
Think of it like packing for a trip. You know equities are volatile in the short term and rewarding over the long term. That's the climate. Any given year's weather is unpredictable. But the climate tells you what to pack.
Pack for the climate. Ignore the forecast.
If you don't have an investment plan, make one. If your costs are too high, fix them. If you're unsure whether your portfolio matches your risk tolerance, find out. These are January jobs that will make a difference.
A New Year's resolution for 2026
We started with weather forecasts. Nobody cancels their summer holiday because February's outlook looks uncertain. We plan for the climate, not the forecast.
The same logic applies to your portfolio. The forecasters will keep forecasting. The headlines will keep screaming. Some predictions might prove correct. Stopped clocks and all that. But your job isn't to out-predict the predictors. It's to have a sensible plan and stick to it.
David Booth, who has spent 50 years in this industry, put it simply: "Despite all the noise and anxiety, investing fundamentals haven't changed."
They haven't and they won't.
The New Year's resolution that requires you to do less might be the most valuable one you ever keep: tune out the noise.
For evidence-based investment insights throughout 2026, keep following this blog and the TEBI YouTube channel.
A big thank you to all our readers and viewers for continuing to share and comment on our content. We will never take your support for granted.
Happy New Year.
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