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Rekenthaler Report

Can Warren Buffett Forecast the Stock Market?

Yes he can, and perhaps accurately.

Setting Expectations
To answer the headline’s rhetorical question, Mr. Buffett can indeed predict the future of the stock market, just as Glendower can call spirits from the vasty deep. However, Hotspur’s response to Glendower remains salient: “Why, so can I, or so can any man. But will they come when you do call for them?” (In a dissent, Justice Scalia borrowed this same Shakespeare snippet more than 30 years ago.)

The spirits certainly will not materialize if summoned to forecast the stock market’s intermediate-term changes. That mission cannot be accomplished. Traders sometimes can exploit immediate movements in an individual security’s price, especially through high-frequency techniques, but they cannot consistently foresee what will happen to the entire market over the next several months.