Devina Mehra: Take 2025 stock predictions with a bucket of salt
Subscribe to enjoy similar stories. The year has started and you have all the Nifty (or Nasdaq/S&P 500) forecasts for end 2025 from every stock-market expert, securities house and talking head on television. Keep them safe to check in December 2025.
For now, you should check what these experts told you a year ago! The truth? It’s in the ‘Objective Ignorance’ category in the book Noise by Daniel Kahneman, Cass R. Sunstein and Olivier Sibony. Index predictions are only one example of humans forecasting things which are not just unknown, but cannot be known.
Yet, they are made with huge conviction in January and Diwali time. “We maintain unchastened willingness to make bold predictions about the future from little useful information," as Kahneman says. I understood this phrase only in 2023, but I have never given index projections for the last three decades that I have been in the market because I intuitively understood that it was impossible to predict market moves.
Interestingly, Bloomberg recently collected the data of index estimates versus their actual moves for the US market, where it has been available in a structured form for the last several decades. These are from venerable banks and Wall Street firms like Goldman Sachs, Bank of America/Merrill Lynch, Citigroup, HSBC, Deutsche Bank, exactly the sort of organizations you listen to very carefully when they appear on your TV screen, thinking that they have great insights into global markets. In an article titled ‘Wall Street’s Forecasts are Out for 2025: Be Dubious’, Bloomberg finds that, on average, each of these large organizations are off in their projections by about 15 percentage points.
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