Evaluation and Ranking of Market Forecasters

Observant1

I came across the following study which evaluates and ranks 68 market forecasters.
Although the study is from 2017, I believe overall results are still pertinent today.

Major finding: the majority of forecasters perform at levels not significantly different than chance,
which makes it very difficult to tell if there is any skill present.

• Across all forecasts, the accuracy is around 48%.
• Two-thirds of forecasts predict as far as only a month.
• Only one-third of forecasts predict periods over one month.
• Two-thirds of forecasters have an accuracy level below 50%.
• Only about 6% of forecasters have their accuracy values between 70% and 79%.
• The highest accuracy value is still below 80%.

https://pdfs.semanticscholar.org/afca/37db6aa17f5be8e5d1ebb93c40cf52413123.pdf
SSRN paper

stillers

Here's a recent M* interview of Christine Benz on the topic.
https://www.morningstar.ca/ca/news/260559/do-market-forecasts-really-matter.aspx

Well on the glass half full side, it kinda disproves one poster's incessant claims that ALL forecasts (except his) are ALWAYS wrong, ALL the time!

FWIW, we use forecasts in a manner similar to what CB suggests, to help shape LT planning assumptions. We annually look briefly at a different forecasts but look daily/weekly at a lot of different T/A's work.

We take deep dives into WHY they are making their respective T/A conclusions. (We spend far more time on T/A than forecasts.) Then like our process of selecting PMs for active funds, we look at who has worthy LT performance records and who are making similar, strong cases for their conclusions. (Note the PM hurdle is consistent S&P outperformance.)

Forecasts are more like guardrails for LT planning, while the aggregate work of T/A's we follow and trust play a large part in our investment strategy, mostly ST, but at times relatively LT as well.

Observant1

I'll often read long-term forecasts and the corresponding rationale provided by various forecasters.
This helps me set reasonable expectations for future returns.
I don't use this information for making trading decisions or to upend my portfolio.
I'm reminded of the dot-com boom in the late 90s.
Some of my IT coworkers (mid 20s to early 30s in age) were extremely exuberant
and expected 20%+ long-term U.S. stock returns far into the foreseeable future.

Mark

I too read forecasts, mostly to learn the various pluses and minuses that shape how they think. No way could I cover that on my own.

No matter how good they are I don't see how any of them can handle todays 3-min tweets of change.