The Investment Horoscope

Reaping the fruits of success brings you incredible joy. And you have earned it fair and square! They who handle money affairs with such skill shall ultimately stand upon the winner's podium.

Well, now I too believe in horoscopes. I just came across astroportal.com and entered my date of birth. Fits me wonderfully, my financial horoscope. I admit, it's pretty generic and applies to any zodiac sign. Who hasn't “earned it fair and square”? My basic thesis, which I’ve recently brought up again after a debate on horoscopes: they are hocus-pocus and have been a popular amusement for thousands of years. Some make money with it, but the damage to the individual is so minor that no one cares. 

It is quite different with financial market forecasts. The damage to those who follow charlatans is sometimes enormous. Although disclaimers are mandatory, no one reads them.

Financial market forecasts and astrology have similarities. 

Unfortunately. The statements must be vague enough so that as many people as possible or as many financial market scenarios as possible can find themselves in them. They must stir emotions that the reader knows well. They actually apply to everyone, but each reader feels addressed individually. The horoscope then must describe a personality trait especially fitting for a zodiac sign. Independent, original, individualistic - that's Aquarius (my zodiac sign). Do these traits fit you too? You are not an Aquarius? No problem, you won’t read any other of the 12 zodiac signs anyway. 

Rising interest rates will trigger a major crisis. What is coming for the banking world has only just begun. The peak of the crisis may not be seen until the fall of 2023. 

A forecast from March 2023, when the U.S. was in the midst of a regional banking crisis. Quick Google find, already forgotten today. But those who read it at the time may have been worried, sold all their shares and waited anxiously for better times with high cash holdings. Meanwhile, share prices rose and would have brought profits to investors. The prophet of doom and writer of the forecast could also write horoscopes with this style. Stir up some emotion, say things that aren't entirely wrong, blame it all on a long period of time (better yet, leave it completely open-ended) and wait. Then either forget the statement or dig it out again a few months later and excitedly announce, “I predicted it!”

Homo Emotionalis.

My standing line in response to any question about future stock market developments: “I don't know what the market will do tomorrow, next week, next month, next year.” That's what Warren Buffett, the successful U.S. investor and CEO of Berkshire Hathaway, says too. But he doesn't read horoscopes. 

As someone said to me in conclusion the other day after a discussion about horoscopes and their truthfulness, “I'm a Pisces, so I believe in these things even if they're not true.” Okay, I give up. The best arguments and explanations are of no use there. Sometimes emotion simply wins.