When all the experts, data and opinions foretell outcomes that don't come to pass, you realise that no-one knows the future - and never has. But Sheryl Sutherland does point out that equity market growth is remarkably reliable in the human-scale long run

By Sheryl Sutherland*

“Lies, damned and lies, and statistics”.
- Mark Twain

On the 14th September an opinion piece by John Authers (Bloomberg) was posted. The article suggested that market behaviour this year has been confusing. We aren’t evaluating the ripple effects of the pandemic which has pushed many to digest – overly so – whatever data comes their way. He suggests that, based on share buybacks which have declined sharply, the markets don’t look encouraging. The declines we see have generally preceded an economic slowdown. Daniel Grosvenor the Oxford Economist director of equity strategy agreed that the second half of 2023 will see a reducing downside support for equities.

By the 18 September Authers wrote another opinion entitled Points of Return (loved that). “After a rally that few of us anticipated, the S&P 500 is plainly going to perform far better for the year than virtually anybody had expected. As a result, the major Wall Street strategists are giving up on the year-end targets that they adopted nine months ago and now look hopelessly bearish. To quote colleagues Jess Menton and Alexandra Semenova, Wall Street is “getting to grips with how wrong it’s been” in 2023. There’s no shame in admitting you’re wrong. It’s a difficult thing to do. If, as most of these strategists have done, you explain exactly what you got wrong, it’s a great learning exercise for the future; we tend to learn more from mistakes than from successes. There’s also more than an element of admitting reality.”

Get a Rabbit by John Lanchester quotes a story: At dinner with the American ambassador in 2007, Li Keqiang, future premier of China, said that when he wanted to know what was happening to the country’s economy, he looked at the numbers of electricity use, rail cargo and bank lending. There was no point using the official GDP statistics, Li said, because they are ‘man-made’. That remark, which we know about thanks to WikiLeaks, is fascinating for two reasons. First, because it shows a sly, subtle, worldly humour – a rare glimpse of the sort of thing Chinese Communist Party Leaders say in private. Second, because it’s true. A whole strand in contemporary thinking about the production of knowledge is summed up there: data and statistics, all of them, are man-made.

They are also central to modern politics and governance, and the ways we talk about them. That in itself represents a shift. Discussions that were once about values and beliefs – about what a society wants to see when it looks at itself in the mirror – have increasingly turned to arguments about numbers, data, statistics. It is a quirk of history that the politician who introduced this style of debate wasn’t Harold Wilson, the only prime minister to have had extensive training in statistics, but Margaret Thatcher, who thought in terms of values but argued in terms of numbers. Even debates that are ultimately about national identity, which as the referendums about Scottish independence and EU membership, now turn on numbers.

Quite frankly I think a rabbit is just as capable of forecasting as the man-made data. We are extremely poor at predicting the future behaviour of markets which is pretty entertaining as the markets are driven by humans not data.

So here I will sum up by telling you what I don’t know plus what I do know. And here are some things I don’t know:

• I cannot predict how the share market will act in the short term.
• I cannot say when market moves are going to stop or start.
• I have no idea of the size of share market moves.
• The share market makes pretty much all of the pundits look foolish.
• The share market doesn’t “make sense” nor should it.

What I do know, if you want growth, share market investment is pretty damn useful.

*Sheryl Sutherland is director of The Financial Strategies Group, and author of Girls Just Want to Have Fund$ – Every Women’s Guide to Financial Independence, Money, Money, Money Ain’t it Funny – How to Wire your Brain for Wealth, and co-author of Smart Money – How to structure your New Zealand business or investments and pay less tax. You can contact her here.