Using Forecasts in Investment Decisions
Expectations about economic and market conditions form the backdrop for stock price, commodity price, interest rate, and currency exchange rate forecasts.
Interpreting and using a price forecast
Investing is all about the future. Every investment decision is a vote for or against an asset based on expectations for how it might behave in the future. Thoughtful investing involves forming expectations about what might happen down the road and how it might impact different investments. Expectations are an educated guess combining present conditions with observations about how similar conditions have played out in the past.
- Forecasts are meant to inform investors about the direction, magnitude, and timing of an index’s or economic indicator’s expected movements.
- Forecasts for performance of asset classes in relation to each other can support tactical portfolio adjustments of exposure to those assets.
- Tactical positioning is intended to exploit near-term opportunities. It is not a substitute for a sound long-term allocation strategy.
Different investments offer different levels of potential return and market risk. There is no assurance any investment strategy will be successful.
Wells Fargo Investment Institute, Inc. is a registered investment adviser and wholly-owned subsidiary of Wells Fargo & Company and provides investment advice to Wells Fargo Bank, N.A., Wells Fargo Advisors, and other Wells Fargo affiliates. Wells Fargo Bank, N.A. is a bank affiliate of Wells Fargo & Company.
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