All of us know, deep down, that trying to predict the future is a fool’s game. The great and the good have no shortage of maxims to that effect: “Among all forms of mistake, prophecy is the most gratuitous,” George Eliot wrote in Middlemarch. Niels Bohr, JK Galbraith and many others have weighed in along similar lines.
Yet certain kinds of predictions are far from useless: they force us to consider different scenarios, and perhaps even confront the limits of our knowledge. In doing so, they may even make us better people – or so a 2018 study claimed.
So there’s some merit to fund managers’ practice of publishing biannual or quarterly investment outlooks. Fund firms understandably shy away from making specific predictions, but they do assign a positive, neutral or negative rating to each asset class. Their output is therefore measurable, and more to the point we can easily assess how views compare and contrast, and how they evolve over time.