It’s been said that if you hear something 30 times, you’ll think it’s true. I traced the root of this notion to a scientific theory called the Illusory Truth Effect, which refers to the human tendency to believe false information if it’s repeated often enough.

This is an important concept in our world of high-velocity media where we’re increasingly barraged with fake everything. False narratives and images get in the way of truth, help maintain the status quo, entrench the elite, and, in the case of investing, lead to suboptimal decisions.

Here are some things you may have heard 30, or three thousand, times that may not be quite right.

It’s the economy, stupid

Speaking of elite, economists are royalty on Bay and Wall Streets. The assumption is, where the economy is going, the stock market will follow.

Unfortunately, it’s more complicated than that. The relationship is tenuous at best because the stock market is looking farther out than the next three to six months and is influenced by events and trends not contemplated in economic models.

For certain, economic activity affects corporate profits, which are in turn the fuel for stock prices, but market moves in the near-term are driven by changes in valuation – how much investors are willing to pay for those profits – more than their earnings variability.

Interest rates are going down

Like older generations who remember buying a Canada Savings Bond with a 20-per-cent coupon, borrowers today remember how low their mortgage rate was three years ago. Since rates jumped in 2022, the recurring question in conversations and commentaries is, when are rates going back down? It seems like it’s only a matter of time before we return to 2021 levels, they say. But history suggests otherwise.

The level of interest rates today is pretty normal, maybe even below normal. The laws of economics suggest that lenders should expect to have more buying power when the loan is repaid. In other words, they’ll have more than kept up with inflation. Today, if a bank makes a loan, or you lend money via a bond or GIC purchase, the yield is generally above the expected inflation rate (although not by a whole lot). This is normal.

Interest rates may go down because of recession or political expediency, but it shouldn’t be an assumption in your financial plan.

The economy is holding up

I hear it regularly. The U.S. economy is doing amazingly well in face of all the disruption and uncertainty. Perhaps, but it’s useful to liken the economy to a neighbour who seems to be doing well. They just put in a new kitchen, have a fancy SUV in the driveway, and are enjoying beach vacations in the winter and European adventures in the summer. What you don’t know is how they’re doing it and what their balance sheet looks like.

The U.S. government is living it up like that neighbour, but in this case, we know exactly how it’s doing it. The numbers are there for all to see. The federal government is spending 33 per cent more than it’s taking in, which amounts to 5 to 6 per cent of the overall economy.

The next time you hear how miraculous the U.S. economy is, remember that you’re hearing about the top line, not the bottom line. Washington is running up its credit cards and line-of-credit, and certainly not maxing out its TFSAs and RRSPs.

2026 – another good year

We’re coming to the end of the 2026 forecast season. You might have noticed that almost every investment professional seems compelled to make a pronouncement about the year ahead. After you hear 30 forecasts, almost all of which anticipate a positive year, you start to believe there are people who know what’s going to happen.

Regrettably, the 30-times rule fails miserably in this regard. Short-term stock market forecasts aren’t worth the paper they’re written on. An overwhelming majority of them project a return of seven to 10 per cent, which seems reasonable given that the long-term average is at the top end of that range, but a more detailed analysis suggests otherwise.

Since 1960, calendar year returns were within 7 to 10 per cent only two times (sourced from our Volatility Meter – 50 per cent Canada stocks/50 per cent global). Two out of 65. Meanwhile, on 20 occasions, annual returns were up over 20 per cent and 14 times were in negative territory.

The investment industry is delusional about market forecasting, as it is about the importance of recent economic data. Don’t go down the same rabbit hole. If you want fiction, read a good book instead.