It’s that time again. Forecasting the financial impact of elections is a popular pastime with investors, analysts, and talking heads every election season (which seems to last all year, every year now). Humans fear uncertainty so much that we often create scenarios to fill in the blanks.

The truth is: no one is good at forecasting election impacts on the markets. Nassim Taleb, author of "The Black Swan," points out that, “Our track record in figuring out significant rare events in politics and economics is not close to zero; it is zero” (Antifragile, pg. 150). He underscores a crucial point: our collective ability to predict significant political and economic events is abysmal.

The experts we most often listen to are the worst at predictions. Philip Tetlock's study of 82,000 predictions over 25 years by 300 experts concluded that expert forecasts are barely better than random guesses. Tetlock discovered that the more confident and famous the expert, the worse their predictions tended to be. In other words, those most confident in their forecasts are often the least accurate.

Additionally, the most famous forecasters often make bold predictions to maintain their public profile. These predictions, usually based on dramatic events like market crashes or booms, are rarely accurate in less dramatic times. Consequently, these experts underperform compared to their less prominent colleagues.

That’s why we don’t forecast or predict. We respond. Markets tell a story. Our job is to listen and respond accordingly to longer-term trends. Markets change, and economies change. It makes sense for portfolios to change based on situational awareness. We feel most confident making changes that rely on a research-based, market-tested, data-driven, repeatable process. Using a process that relies on math, not a forecaster’s prediction, eliminates emotion and ego from the equation. Math doesn’t care about politics, just supply and demand.

Given this evidence, we must focus on what we can control instead of trying to predict political events and their impact on the markets.

Peter Drucker is credited with saying, “The best way to predict the future is to create it.” Going into election season, it's important to remember the Three Rules of Investing. These rules will guide us, help us avoid the pitfalls of prediction, and adopt a more controllable approach to making smart financial decisions.