Everyone’s Crystal Ball is Broken

Jun 2020

The “Experts” are Lost

COVID-19 has unfortunately brought great economic, medical and financial turmoil to many around the world. The resulting lockdown on the global economy is unprecedented, and naturally the true effects of unprecedented events are hard to measure in real time — and even harder to predict.

U.S. unemployment has reached record highs (14.7% as of Q1 20201), while GDP has contracted by 4.8% over the previous quarter (the chart below puts that change in historical context).

Real GDP: % Change from Previous Quarter

The impact is undeniably large, and amidst so much uncertainty there is a question that everyone wants to know — what happens next? Surely the “Experts” have a good idea.

Enter the Experts

When we started the year, it would have been hard to imagine that we would spend as much time hearing from virologists and economists as we have. It is always good to hear the opinions and perspectives from those that have more domain experience than ourselves, however there is one problem — many of these domain experts have completely different opinions, leaving us somehow less sure of the future than before. We have heard differing views on everything from how the disease spreads, to economic reopening dates, to the efficacy of masks. However, most recently the difference in expert opinion can be best highlighted in the GDP forecasts for the current quarter.

Do Great Minds Really Think Alike?


Source: Charles Schwab

Statisticians often say, “All models are wrong, some are helpful.” When we look at these “Expert” forecasts for GDP, there is such a wide range of expected outcomes that it is hard to even deem them helpful. If nothing else, this lack of consensus tells us that, in aggregate, these “Experts” are about as unsure as anyone else on the economic future. If an investor were to try to make investment decisions based on a single one of these forecasts, their chances would be no better than a roll of the dice; surely not their intentions with something as important as their financial futures.

Setting the Crystal Ball Aside

There is certainly a sensory overload in times like these. The events taking place are unprecedented and simultaneously life altering. All of the headline news and expert forecasts can cause many investors to make decisions that are ultimately not in their best financial interest. This is exactly the reason that we started Blue Square Wealth.

You Deserve Better

At Blue Square rather than trying to predict the future, we aim to prepare for it, regardless of its direction. Using our proprietary technology and rules-based approach to investing, our decisions are not swayed by predictions or emotions.

Our investment strategy has a risk management focus that aims to position portfolios defensively during significant market declines. By systematically raising cash during these periods and then investing it when markets are more accommodating, we aim to create a less volatile investment experience, and ultimately deliver better risk-adjusted returns over full market cycles.


1) Source: Bureau of Labor Statistics, as of Q1 2020

Blue Square Wealth is a SEC-Registered Investment Adviser. A copy of the Firm’s Current Disclosure Brochure can be found on the SEC’s IAPD site or may be requested at any time by contacting us. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission.

All investment strategies have the potential for profit or loss; changes in investment strategies, contributions or withdrawals may materially alter the performance and results of a portfolio. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will be suitable or profitable for a client’s investment portfolio.

Significant risk may accompany investments in stocks, bonds or other asset classes over short periods of time. Investment return and principal value will fluctuate with changes in market conditions. Your investment may be worth more or less than your original cost. Past performance is not indicative of future results.

This blog is a publication of Blue Square Wealth. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy and it should not be regarded as a complete analysis of subjects discussed. All expressions of opinion reflect judgment of author as of date of publication and are subject to change. Information contained herein does not involve rendering of investment advice. A professional adviser should be consulted before implementing any of strategies presented. Information is not an offer to buy or sell, or a solicitation of any offer to buy or sell securities mentioned herein. Different types of investments involve varying degrees of risk. Economic factors, market conditions, and investment strategies will affect performance of any portfolio and there are no assurances that it will match or outperform any particular benchmark. This document may contain forward-looking statements relating to objectives, opportunities, and future performance of U.S. markets generally. Forward-looking statements may be identified by the use of such words as; “believe,” “expect,” “should,” “potential” and other similar terms. Examples of forward-looking statements include, but are not limited to, estimates to financial condition, results of operations, and success or lack of success of any particular investment strategy. All are subject to various factors, including, but not limited to economic conditions, changing levels of competition in industries and markets, changes in interest rates, and other economic, governmental, regulatory and other factors affecting a portfolio’s operations that could cause results to differ materially from projected results. Such statements are forward-looking in nature and involve known and unknown risks, uncertainties and factors, actual results may differ materially from those reflected in forward-looking statements. Investors cautioned not to place undue reliance on forward-looking statements / examples. None of Blue Square Wealth or any affiliates, principals nor any other individual / entity assumes any obligation to update any forward-looking statements as a result of new information, subsequent events or any other circumstances.

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