NEW YORK (ETF Expert) -- Las Vegas odds-makers believe the San Francisco 49ers will beat the Baltimore Ravens to win Superbowl XLVII Sunday. That's what is implied by a four-point spread. In contrast, if the professionals did not feel that the 49ers had a definitive edge, there would neither be a spread nor a so-called "favorite."
Yet, an equal percentage of gamblers are likely to bet on a Ravens victory. Some will choose the Ravens because they expect the 49ers to win by three points or fewer. Some will choose the Ravens because they expect the team to win outright. Others will choose a team based on little more than a hunch that one squad will prevail.
Why am I bringing up the big game? In part, it's to illustrate that nobody has any idea who will hoist the Lombardi Trophy. Professional odds-makers, gamblers, grandpas, the guy down the street -- there's not a person who knows how the future will actually unfold. (Note: For what it's worth, I like San Fran.)
Bringing the conversation back around to the world of finance, how many economists successfully "predicted" that U.S. gross domestic product (GDP) would contract in the final quarter of 2012? I haven't seen a single credible "call."Similarly, how many investment gurus expressed confidence that Greece would still be a member of the European Union by the end of 2012? Didn't an overwhelming majority of folks insist that a "Grexit" was imminent? Even when a superstar goes out on a limb with a bold prognostication, he/she did not actually know how the future would ultimately play out. Consider hedge fund sage John Paulson. The wunderkind was supposedly prescient for shorting sub-prime loans prior to the 2008 financial collapse. Yet, he went on to lose -53% in 2011 and -18% in 2012 -- hedge fund category returns that ranked "dead last" and second-to-last respectively. Predictive powers do not exist. Still, the media frequently ask if I am bullish on this or bearish on that. Yes, I have definitive opinions... I was born and raised in New York, for heck's sake. On the other hand, my finest quality as an asset manager is understanding how to minimize the loss when I am wrong.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV