The smartest investors in history agree: Trying to forecast the economy or time the market rarely works. Here’s why you should focus on preparation instead of prediction.
The investing world is filled with predictions. Turn on any financial news channel and you’ll hear experts confidently forecasting where the market is headed next. Check your social media feed, and you’ll see people claiming they called the latest market move.
It all makes prediction seem possible, even necessary.
But here’s what three of the most successful investors in history want you to know: Market prediction is a fool’s errand, and you don’t need it to succeed.
What the Legends Say About Prediction
Howard Marks, the billionaire co-founder of Oaktree Capital Management, has spent over 50 years navigating market cycles. His advice cuts through the noise:
“You can’t predict. You can prepare.”
Marks is blunt about economic forecasting: It doesn’t add value. But here’s the crucial part that many investors miss — preparation doesn’t mean you need to know what’s coming next, or even accurately assess where you are in the market cycle. Most people can’t do that either.
Instead, Marks advocates being prepared for everything. If the stock market has gone up for three straight years and stocks are historically expensive, there could be a pullback. That doesn’t mean there will be one. The market could keep climbing for years. But you should be prepared for either outcome.
The key distinction? Marks doesn’t waste time trying to predict when things will happen. He prepares his portfolio to handle whatever actually does happen, whether that’s continued gains, a correction, or something in between.
Peter Lynch, who averaged a stunning 29.2% annual return managing Fidelity’s Magellan Fund, was even more pointed about the futility of economic prediction:
“If you spend 13 minutes a year on economics, you’ve wasted 10 minutes.”
Lynch wasn’t exaggerating for effect. He conducted a study comparing investors who had perfect timing (buying at the exact low point each year) versus unlucky investors who bought at the exact peak every year. Over 30 years, the “lucky” investor earned 11.7% annually while the “unlucky” investor earned 10.6% annually.
That’s right: The difference between perfect timing and the worst possible timing was just 1.1 percentage points. Lynch’s conclusion? Trying to time the market is “a total waste of time” because even if you could predict perfectly (which you can’t), it barely matters compared to simply staying invested.
Jack Bogle, founder of Vanguard and creator of the first index fund, put it most starkly:
“After nearly 50 years in this business, I do not know of anybody who has done market timing successfully and consistently. I don’t even know anybody who knows anybody who has done it successfully and consistently.”
Think about that. Bogle spent half a century working with the most sophisticated investors in the world, and he never encountered anyone who could reliably time the market. If it can’t be done by professional investors with teams of analysts and advanced tools, what chance does the average person have?
Why Prediction Feels Possible (But Isn’t)
Here’s the problem: Some predictions always come true.
In any given year, someone will call the market top. Someone else will predict a crash at just the right moment. In 2022, bearish forecasters looked brilliant when the market fell 18%, and they doubled down, warning that worse was coming. When the market then soared in 2023 and 2024, those same voices quietly faded into the background.
What you don’t see are all the times that same person was wrong. Or the hundreds of other experts who made the opposite prediction. The forecasters who correctly called for caution in 2022 then completely missed the historic rally that followed. The ones who were bullish in 2021 were wrong in 2022 but right again in 2023.
As Howard Marks notes, occasional correct forecasts prove nothing: “Once in a while, however, the future turns out to be very different from the past. It’s at these times that accurate forecasts would be of great value. It’s also at these times that forecasts are least likely to be correct.”
The Recession That Never Came
Want proof that predictions don’t work? Look at what happened from 2022 through 2024.
The market had been on a tear. From 2019 through 2021, the S&P 500 gained 31%, 18%, and 29% respectively — a stunning run that left stocks up nearly 75% over three years. Everyone knew what was coming next.
The warnings were everywhere: Markets were overvalued. The CAPE ratio hit levels not seen since the dot-com bubble. Government spending had been excessive. Inflation was raging. The Federal Reserve was raising interest rates at the fastest pace in decades.
Then in 2022, it happened. The market fell 18%. For investors who’d been waiting for the other shoe to drop, this was confirmation. The real crash was just beginning.
And that’s when the predictions got really loud.
In October 2022, Bloomberg Economics declared there was a 100% probability of a recession within the next 12 months. Not 90%. Not 75%. One hundred percent.
The Economist published a piece titled “Why a global recession is inevitable in 2023.” Nearly 70% of economists surveyed predicted the National Bureau of Economic Research would officially declare a recession in 2023. Major financial institutions warned clients to brace for impact.
Morgan Stanley predicted stocks would “re-test” the 2022 lows in the first half of 2023. Bank of America’s chief economist warned 2023 “could be a difficult year.” JPMorgan saw more pain ahead before any recovery. The Mortgage Bankers Association stated flatly, “We are expecting a recession in the first half of 2023.”
The message was clear: The 18% decline in 2022 was just the beginning. The massive government spending during COVID was coming home to roost. Inflation would remain elevated. Corporate earnings would collapse. Unemployment would surge.
Investors who’d stayed the course through 2022 were told they’d made a mistake. The smart money was sitting in cash, waiting for stocks to fall further before buying back in at lower prices.
Here’s what actually happened:
The S&P 500 gained 26% in 2023 — one of the strongest years on record. Then it gained another 25% in 2024. And in 2025, it’s up another 15% year-to-date.
No recession. No earnings collapse. No return to 2022 lows.
Investors who sold in 2022 or early 2023, waiting for the “inevitable” recession, missed one of the best two-year stretches in market history. Someone who invested $100,000 at the start of 2023 and stayed invested would have over $156,000 by late 2024. Someone who sat in cash waiting for better prices? They’d still have $100,000 (actually less, after inflation).
The economists, strategists, and market timers weren’t just slightly off. They were spectacularly, comprehensively wrong. As one analyst admitted in late 2023: “I’ve never seen the consensus as wrong as it was in 2023.”
What You Should Do Instead
If you can’t predict, what’s an investor to do? The answer is simple: Prepare instead of predict.
Here’s what that looks like in practice:
Be Prepared When Prices Are High (Like They Are Now)
You don’t need to predict the exact market top or time a perfect exit. But when markets have been climbing for years and valuations are stretched, recognize that multiple outcomes are possible. The market could keep rising, or it could pull back sharply.
Being prepared means having a portfolio allocation you can live with through either scenario. It means not being so aggressive that a 20% or 30% drop would devastate you financially or emotionally. You’re not predicting a crash, you’re simply ensuring you can handle one if it comes.
Understand What You Actually Own
This isn’t about analyzing individual stocks; it’s about understanding your portfolio’s risk profile. If you own nothing but technology stocks and NASDAQ funds, you need to know that you’re taking concentrated risk. When tech sells off, your entire portfolio moves together.
A truly diversified portfolio spreads your bets across different sectors, geographies, and asset classes. That doesn’t eliminate risk, but it ensures you’re not putting all your eggs in one basket. Know your exposures, understand your vulnerabilities, and make sure they align with your goals and risk tolerance.
Stay the Course Through Inevitable Volatility
Investors who buy diversified, low-cost portfolios and hold them through market ups and downs consistently outperform those who try to be clever with timing. The winning formula is owning a broad slice of the market and then doing nothing through the noise.
Build a portfolio you can stick with through volatility, keep an emergency fund so you never have to sell in a panic, add money regularly regardless of conditions, and ignore the daily noise while focusing on your long-term plan.
Match Your Investments to When You Need the Money
You can’t predict what the market will do next year, but you can predict when you’ll need your money. If you’re retiring in two years, you shouldn’t have 100% of your savings in stocks, regardless of how bullish you feel about the market’s direction.
Money you need within the next few years belongs in stable investments like savings accounts, CDs, or short-term bonds. Money you won’t need for a decade or more can weather the storms that come with stock market investing. The further away your goal, the more risk you can afford to take — not because you can predict the market, but because you have time to recover from the inevitable downturns.
This isn’t market timing. It’s basic planning. Your investment strategy should be driven by your timeline, not by predictions about what the market will do next.
Final Thoughts
You don’t need to know what happens next; you just need to be ready for whatever does.
That means:
- Building a diversified portfolio you can stick with through volatility.
- Keeping an emergency fund so you never have to sell in a panic.
- Adding money regularly, regardless of market conditions.
- Ignoring the daily noise and focusing on your long-term plan.
Howard Marks made billions by preparing, not predicting. Peter Lynch beat the market for 13 years without wasting time on economic forecasts. Jack Bogle built Vanguard into a $7 trillion empire by showing everyday investors they don’t need to be fortune tellers.
The lesson? Stop trying to predict the unpredictable. Focus your energy on what you can control: your asset allocation, your costs, your behavior, and your time horizon.
As Lynch reminded investors: “Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves.”
The market will go up. It will go down. It will surprise you. Your job isn’t to predict these moves. Instead, it’s to be prepared for all of them and stay invested through them all.
The post Investing Rule: You Can’t Predict (So Stop Trying) appeared first on Clark Howard.
