The folly of forecasting

MARKETS

Alan Porter, manager of the Securities Trust of Scotland, on why investors whose performance hinges on market forecasts are unlikely to prosper for long this year.

As the Hogmanay celebrations fade away and we are left to contemplate another slew of unrealistic New Year’s resolutions, fund managers are often canvassed for their views on the market in the year ahead. But for bottom-up stockpickers like me, such predictions have little value. Can anyone really tell, for example, how much a barrel of Brent crude will cost in 12 months’ time? Or how fast Chinese GDP will grow? If you are thinking about answers to these questions, is your oil price forecast based on a supply/demand model or do you expect Iran to block the Straits of Hormuz? Does your...