Disregard Short-Term Forecasts and Predictions






During periods of uncertainty, investors often gravitate to the investment media for insights into how to position their portfolios. While these forecasters and prognosticators may be compelling, they usually add no real value.

The study below tracked the average interest rate forecast from The Wall Street Journal Survey of Economists from December 1982-December 2009. This forecast was then compared to the actual direction of interest rates. Overall, the economists' forecasts were wrong in 36 of the 55 time periods—65% of the time!

Do not waste time and energy focusing on variables that are unknowable and uncontrollable over the short term, like the direction of interest rates or the level of the stock market. Instead, focus your energy on things that you can control, like creating a properly diversified portfolio, determining your true time horizon and setting realistic return expectations.


Six Month Average Forecasted Direction vs.
Actual Direction of Interest Rates
The Wall Street Journal Survey of Economists (12/82-12/09)

Source: Legg Mason and The Wall Street Journal Survey of Economists. This is a semi-annual survey by The Wall Street Journal last updated December 31, 2009. *Benchmark changed from 30 Year Treasury to 10 Year Treasury. Past performance is not a guarantee of future results.



This material is authorized for use by existing shareholders. A current Davis Funds prospectus must accompany or precede this material if it is distributed to prospective shareholders. You should carefully consider the Fund's investment objectives, risks, charges, and expenses before investing. Read the prospectus carefully before you invest or send money.

Davis Advisors investment professionals make candid statements and observations regarding economic conditions and current and historical market conditions. However, there is no guarantee that these statements, opinions or forecasts will prove to be correct. All investments involve some degree of risk, and there can be no assurance that Davis Advisors' investment strategies will be successful. The value of equity investments will vary so that, when sold, an investment could be worth more or less than its original cost.

The chart in this report is used to illustrate specific points. No graph, chart, formula or other device can, by itself, guide an investor as to what securities should be bought or sold or when to buy or sell them. Although the facts in this report have been obtained from and are based on sources we believe to be reliable, we do not guarantee their accuracy, and such information is subject to change without notice.

Broker-dealers and other financial intermediaries may charge Davis Advisors substantial fees for selling its products and providing continuing support to clients and shareholders. For example, broker-dealers and other financial intermediaries may charge: sales commissions; distribution and service fees; and record-keeping fees. In addition, payments or reimbursements may be requested for: marketing support concerning Davis Advisors' products; placement on a list of offered products; access to sales meetings, sales representatives and management representatives; and participation in conferences or seminars, sales or training programs for invited registered representatives and other employees, client and investor events, and other dealer-sponsored events. Financial advisors should not consider Davis Advisors' payment(s) to a financial intermediary as a basis for recommending Davis Advisors.

Shares of the Davis Funds are not deposits or obligations of any bank, are not guaranteed by any bank, are not insured by the FDIC or any other agency, and involve investment risks, including possible loss of the principal amount invested.

Davis Distributors, LLC, 2949 East Elvira Road, Suite 101, Tucson, AZ 85756, 800-279-0279

 






























   SITE MAP