Forecasting: Why We Don’t Look At the Weather Anymore

Forecasting: Why We Don’t Look At the Weather Anymore

The weather, just like financial outcomes, is difficult to predict. It’s a tough spot for most financial advisors. There are always predictions about GDP, the unemployment rate, and the markets, and it seems these predictions always either surprise or disappoint. When you are approaching retirement and have a fixed amount of savings, you can’t afford to be that wrong. Being wrong can really do some damage.

Join us today as Financial Advisors Rob McClelland and Mike Connon discuss what common predictions you should avoid.



Rob (00:00):

Hello, this is Rob and Mike from The McClelland Financial Group of Assante Capital Management and this is Think Smart with TMFG. Today on Think Smart with TMFG, Mike and I are going to be discussing forecasting. Why we don’t look at the weather anymore. Mike, it’s interesting, I’ve had a couple of experiences lately with respect to weather. As many of you know I’m doing a rebuild on our cottage and the siding guys were in one morning and it was bright and sunny, but it was starting to get a little dark and they had stopped work, the rain had started to fall. And I had been looking at the weather app and it said it was supposed to rain that day, but I decided to look at the Radar and I actually have three different Radar apps. I have no idea why I have three on my phone, but I do.

Mike (00:58):

It’s a golfer.

Rob (00:59):

I’m a golfer. And all three of them showed yes, there would be a brief shower for about half an hour and the rest of the day was sunny. And so I pointed that out to one of the siding gentlemen and he said, “Well, I looked at the local airport weather and it said it’s going to rain all day.” And I said, “Well, I think you’re wrong. I think it’s going to be sunny.” And he said, “Well, we should bet on it, but we’ll see what happens tomorrow.” Of course, I was a hundred percent right because I had used the Radar, but that was just luck.

Mike (01:35):

Well it’s funny, I remember being a kid, remember you’d watch the five o’clock news and you’d sit around. I was in the state so I had Al Roker, they had the pretty weather girls that were on there to do the weather. But that was always the big thing. The day before you get your five-day forecast and you try to plan your whole week around it and it was horribly inaccurate back then. They always made fun of them. I think they’ve got more accurate, but I find the Apple weather’s terrible. It just gives you a whole idea for the day and it’s usually off. I’ve tried that app-

Rob (02:08):

It says rain, cloud or sun.

Mike (02:10):

Yeah, it’s always horrible. What apps do you use for weather?

Rob (02:13):

Well, I still swear by the Radar apps, but some of them are better than others. The problem is, is they’re not perfect, they’re just estimates. And as we know, weather changes. We were recently away on a trip and I had rented a boat and we were out in the ocean and I was feeling very, a little nervous because I’m a freshwater boater, not a saltwater boater and there’s a big difference. Waves are much bigger on the ocean. And the day looked pretty calm. The forecast was for the weather to be mild and at about noon we came around a point and suddenly everything changed. The waves were no longer waves, they were swells. The first two that we hit, the bow of the boat went under and that’s all because I had followed some prediction as to the weather and the wind for the day. So it can be very dangerous.

Mike (03:13):

It can be. I spent many time … The worst thing I see people do is plan their weekends around weather. I’ve had people come up and say, “I’m not going to come up to the cottage this weekend because I looked and it’s going to rain.” And I sat there in this most beautiful sunny days, for two days in a row with no rain and it’s fine. And I think how do they miss out just by worrying about the weather. I usually find now whatever the weather is, you just deal with. I’ll have to adjust plans if I plan on golf and it’s a thunderstorm I’m not going to golf, but I’m not going to change my whole plans four or five days beforehand hoping that the weather’s going to match up with what some app told me.

Rob (03:52):

So we recently, and we touched on this, we’re told by our compliance department not to be making forecasts and we try not to and with good reason. We recently had a video that came out that had made a bit of a forecast that the market correction appeared to be over and sure enough it appears we’re back in it. So it’s why you have to be very careful about making predictions. But humans love predictions.

Mike (04:19):

It’s fun.

Rob (04:21):

They especially love really bad predictions. Things about bad things that are going to happen. Like sporting role loves to make predictions. Who’s going to win this game? Who’s going to win this tournament? Who’s going to win the Stanley Cup at the end’s? Who’s going to win the Super Bowl.

Mike (04:37):

I went to Sport Illustrated and saw the Super Bowl. I have all the predictions. I almost feel I don’t have to watch the season anymore. They told me who’s going to win by how much and so everything is laid out, but I never see them being right. But they’ve given me the whole predictions for the whole year.

Rob (04:49):

Well it’s funny you say that. Ingrid always says, well we want to watch a movie and so I like to watch the trailer and she makes me turn off the trailer after about 10 seconds because she goes, it’s already showing me too much of the movie. I don’t want to see it. So in the world of predictions, what are the predictions that we have to work against? What is tough for a financial advisor and for their clients, what are some of the predictions that are always coming at us that make investing really difficult to do?

Mike (05:22):

Well, there’s always predictions in regards to interest rates. We always hear that coming. That’s a constant one. We hear predictions coming about GDP numbers, whether they were going to be positive or negative or how much. I mean that they’re being put out by the government. The government makes these predictions, it’s not even from us. We hear unemployment number predictions coming out where we expect unemployment to be, and then when it actual numbers come out, they either surprise or disappoint. Those are your two words. You’re either surprised or you’re disappointed. You’re never surprised that you’re disappointed. Disappointed you’re disappointed.

Rob (05:57):

You’re surprised or disappointed.

Mike (06:00):

Yeah, you’re either surprised or disappointed. So that’s all the unemployment rates that come out. I mean, there’s always predictions around the stock market. You can’t open the paper without reading someone’s idea, what’s going to happen in the future of the stock market. It’s just out there and people like it. People want to, they bask in the glory of making money when things are predicted go up and they like to live in the gloom of when we hear this whole depressions coming out the stock market too. And the predictions are usually pretty extreme. You never see very mild predictions. They’re always either very one-sided toward the negative or one sided toward the positive.

Rob (06:38):

So if you were going to make, if we were able to make predictions and you were going to make a prediction, you’d make a bold one.

Mike (06:43):

Yeah, well otherwise no ones going to read your prediction.

Rob (06:46):

Well, it’s always interesting because the boldest one will get the biggest headline. So if you predict that the market will have a 30% crash by the end of the year, that’s going to get a big headline. If you predict that the market’s going to earn 6% by the end of the year, that’s not, that might not even make the newspaper.

Mike (07:06):

And some people are contrarian by nature and they’ll generally make predictions or opposite to everyone else thinks, and sometimes they’re right, other times they’re wrong. So there’s always those different types of opinions coming at you and so it’s very difficult for investors to make decisions. Even real estate, you hear real estate predictions, real estate market going up or down. Now their predictions are with interest rates and all this stuff it’s going to go down. But you hear that across the board, hear other people predict that there’s massive immigration in Canada and real estate’s the strongest place to be out five or 10 years. And you can understand both points. It’s very difficult right now to decide who’s right or who’s wrong.

Rob (07:44):

What are some of the dangers of making predictions or forecasts?

Mike (07:48):

Well, when you’re wrong. As you said, when you go out on the ocean and you end out on the ocean in a small ship that can’t handle the wrong prediction, you got to make sure you’re in the right boat that can deal with you making a wrong prediction. And if you go out in the ocean and you get a good forecast and you’re driving a 18, 19 foot boat and all of a sudden you’re wrong, you have a problem. I mean, maybe if you have a hundred foot ocean vessel that’s meant to do with that you have a little bit more space to do in these predictions. And it’s much like that with advisors.


If you’re in a situation where your young advisor or a young client and you’re making investments for 30 or 40 years into the future, you can afford to be wrong. If you’re coming into retirement you don’t have much money, you’re trying to go and get through a retirement on a fixed amount of money, you can’t be wrong. You can’t afford to be that wrong. So again, you have to be very careful because at a certain stage, wrong can really do some damage.

Rob (08:45):

Use the example of Bitcoin. How many times were we being told that Bitcoin was the new currency of the future? And today it’s down 50, 60, 70% from the highs that it reached not that long ago. I think the problem with making bold predictions is a, you’re making a prediction on the future and no one knows the future. And it’s not that you don’t know that team A is better than team B. What you don’t know is how many injuries will team A sustain, or how well will some player or players on team B play because it’s the playoffs. Those are things that you can’t predict. You can try and predict, more often than not, you’re going to be wrong, which is why most of the experts are wrong in picking stocks and picking sports teams. We’ve talked about predicting the weather. It’s really difficult to do because you can’t predict the future.

Mike (09:47):

And the tricky part is predictions can be dangerous. Sometimes you have to believe in long-term forecasts. We talked about the weather, so I can’t tell you what it’s going to be like tomorrow, but I can tell you when we get to January 15th, it’s probably going to be a colder day than it is today. It’s a possibility, may not, there might be some miracle that happens so it’s always possible, but there’s a good chance it’s going to be a lot colder than today. We have experience in that. Right, so…

Rob (10:13):

I think January will likely be colder than September. I think that’s a fairly safe recommendation.

Mike (10:20):

Yeah. So you can go that way.

Rob (10:23):

Will there be snow this winter?

Mike (10:25):

There will be some snow.

Rob (10:26):

Okay. That’s a reasonable prediction.

Mike (10:28):


Rob (10:28):

Okay. What about in the investing world? What’s a safer prediction and let’s say over time?

Mike (10:34):

Over time, generally to own stocks has done better than owned bonds. Not always. There’s been a few cases, there even been a few 20 year periods where it hasn’t worked out that way. But through looking from the early 1900s, generally speaking over most periods of time, stocks have done better than bonds.

Rob (10:53):

So you’re over the long term, you’re typically better to be an owner than a loaner.

Mike (10:58):


Rob (10:59):

Today the medical world tells us what we need to do. There was some recent change in how much you’re supposed to drink. We used to be okay at 15 drinks a week. Now they’re saying anything north of two drinks a week. Is it a week? Yeah, it’s a week or a day. I can’t remember. It’s a week. Two a week is dangerous.

Mike (11:20):


Rob (11:22):

Predictions do change over time, certainly on the health field. So we’re not a big believer in forecasts. We’re not a big believer in predictions. In fact, I think most of it, it’s interesting reading, but that’s about it. We don’t base any of what we’re doing as financial advisors based on predictions. Probably the only prediction is we’re all going to get a little older and at some point we’re going to pass on from this earth.

Mike (11:54):

And you’re going to pay taxes.

Rob (11:56):

And you’re going to pay taxes. That brings us to the end of another week. Thank you for joining us. This is Rob and Mike with Think Smart from the McClelland Financial Group of Assante Capital Management reminding you to live the life that makes you happy.

Assante Capital Management (12:32):

You’ve been listening to the McClelland Financial Group of Assante Capital Management Limited. Assante Capital Management Limited is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. Insurance products and services are provided through Assante Estate and Insurance Services Incorporated. This material is provided for general information and is subject to change without notice. Every effort has been made to compile this material from reliable sources. However, no warranty can be made as to its accuracy or completeness. Before acting on any of the previous information, please make sure to see a professional advisor for individual financial advice based on your personal circumstances. The opinions expressed are those of the authors and not necessarily those of Assante Capital Management Limited.


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