When investing in stocks, prepare, don’t predict
We tend to extrapolate what we see in the present, which is why investment and economic projections are usually way off the mark
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THE world is now bracing for a recession, as an economic slowdown is poised to take hold across many industries. Whether it is microchips or potato chips, companies are becoming cautious.
Taiwan Semiconductor Manufacturing Co, the world’s largest chipmaker, has cut its capital expenditures for this year due to waning demand for microchips. PepsiCo, the maker of Lay’s Potato Chips, has warned that a “cost-of-living crisis” is likely to see reduced demand for its snacks and sodas.
Indeed, it seems almost everyone is predicting a recession with near certainty. If this high conviction does not unsettle you, it should! After all, recessions are notoriously tough to predict; trained economists often fail at this seemingly simple task.
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