You might think that company executives, with their access to the best information on corporate trends, would be good at predicting stock market movements, but you would be wrong. They are terrible at it.

In a pioneering study, the 2015 IMD World Competitiveness Executive Survey asked executives to predict stock market performances for that year. The survey, conducted between February and April of last year, forecast an overall global stock market gain of 9.4%, but the MSCI World Stock Market Index ended up falling 0.32%. The correlation between the forecast and the actual return was 0.003, which amounts to zero correlation.

When it came to how their local stock markets would perform, the errors were sometimes sizeable.  Indonesian executives told us that they expected a return of +22.9% on average, but the market ended up falling 9.9%. Sometimes our respondents were too pessimistic: in Ireland, where the stock market jumped 30%, executives had predicted a gain of 7.5%. The natural optimism of the United States was certainly confirmed by our data: the stock market prediction there was for a 6.9% rise, but the actual return was a more modest 1.3%.

Executives in the Nordic countries produced the most accurate predictions. Worldwide, executive forecasts erred by about ±7.5%. In the Nordic countries, the error was ±5%.  What makes the region interesting is that, while the rest of the world was too optimistic (as shown by the MSCI prediction), the Nordic executives were overly cautious. On average, the Nordic executives forecast regional gains of 10%, compared with the final result of +15%.

























But even in the Nordic region we can see significant differences between the countries, with the Danes falling far short with their prediction, while the Swedes and the Norwegians showed excessive optimism.

So what conclusions can we draw from the survey? Unfortunately, there is only one: however good executives are at running their companies, when it comes to predicting stock market trends, most of them are no good. So if you want our advice – do not follow the stock market recommendations of business people: if they are right, it will only be by chance.

Arturo Bris is Professor of Finance at IMD and directs the IMD World Competitiveness Center. He will be giving a keynote speech at IMD's Orchestrating Winning Performance (OWP) which takes place from June 27 to July 1 2016.