It’s that time of year again. In the coming weeks, financial publications and gurus will release their hot list of stocks to buy, the best mutual funds, which sectors are going to out perform the market and which ones to avoid, and on and on. And, with all the upcoming holiday parties, I am sure to receive questions about my outlook on the market and whether it will go up or down. (Since I’ll be celebrating the holidays, I’ll simply stuff my face with a tasty morsel or down another beverage.)
Investors are driven by the innate human need for emotional and psychological security. Randomness is terrifying and creates discomfort. Investors want to believe that they or someone else knows what's going to happen next year. As such, they buy the hot lists and listen for hot tips. Some even pay substantial sums of money to those who claim to know what the future holds.