Dimensional Funds

Triune Makes a Bold 2014 Prediction

Cash will be stable. High quality bonds with shorter maturities will be less volatile than stocks. And stocks (or more simply, ownership in the best run companies in the world) will once again be the most volatile.

OK, so it’s really not that bold after all, but that’s the GOOD NEWS! Indeed this is what we actually expect for the coming year and thus WHY we have positioned our clients’ portfolios in a manner that matches their short- and long-term goals and expectations. It’s also why we place NO CREDENCE in what all the so-called experts claim to be able to forecast for 2014.

In all seriousness, we’re barely one week into the New Year and I’ve already received 48emails from various financial publications and money managers with their guess/prediction for 2014 (Do that many people really get paid to guess for a living?). As you can imagine, they run the gamut from “a stalling economy” to “explosive economic growth”. The point is that this is the nature of investing in equities — in the short-run, it IS unpredictable.

If you’d like to see just how far-off some of these “experts” were in their predictions at this time last year, click on the picture below to read a short article. I’m reminded of a quote often attributed to Abe Lincoln or Mark Twain: “It is better to remain silent and be thought a fool than to open one’s mouth and remove all doubt.”

Jelly Beans and the Stock Market

At Triune’s recent Open House, we did a fun experiment. All of our visitors guessed how many jelly beans were in a jar. Enticed with a prize (Visa gift card) for the winner, they had motivation to make a good guess. You wouldn’t think it, but the results are actually analogous to the behavior of individual investors as compared to the stock market as a whole.

Here are the results of our Jelly Bean Experiment:

  • There were 53 total guesses submitted
  • The highest guess was 3,100
  • The lowest guess was 150
  • The average of all submitted guesses was 588
  • AND the actual number of Jelly Beans was 554
  • Our winner, incredibly, guessed 556!

Isn’t it interesting how remarkably close the “Average” guess of all 53 participants was to the “Actual” number? Click on this 3 minute video clip to see how similar this exercise is to where stocks are trading at today. Triune believes that, working together, we can harness this collective knowledge to put the power of the capital markets to work for you.