From time immemorial many have attempted to predict the future.
In ancient Greece people visited the Delphic Oracle who made predictions, usually obscure, about forthcoming events.
To obtain early information about the outcome of battles, the Rothschilds, with European-wide branches, sent observers to battlefields as the results had obvious implications for the markets. If the Rothschilds were observed smiling, the public inferred good news.
A well-known Danish physicist, Niels Bohr, was saying how difficult it was to predict the future. In a famous quotation movie mogul Sam Goldwyn stated that he never made predictions, especially about the future!
A study conducted by Philip Tetlock, a management expert at the University of Pennsylvania, reviewed the results of a 20-year study by professors, journalists and civil servants, of more than 28,000 predictions. Their results were abysmal; about the same as pure chance.
Predictions by analysts associated with the investment industry often were without merit. Their pay is huge. Sometimes their opinions were self-serving to bolster their personal investment. They were never held accountable, yet their opinions were eagerly sought even though they frequently led to unwise investments. Companies sometimes paid analysts to write favourable opinions of company operations.
The record of governments forecasters is appalling. In the previous decade the pronouncements of the head of the U.S. Federal Reserve Board often were misleading; he asserted that there was no bubble in house prices, and further if there were, it would be self-corrected promptly with no trouble.
Still, even now quotations from the federal reserve board’s minutes are followed closely for clues to the outlook.
Military intelligence during the Second World War was very bad. Few foresaw the collapse of the French army, supposedly the best in the world. Experts in the U.S. military believed that Russia would not survive the German attack and that Russia would flounder in six weeks. U.S. army “experts” believed that the Iraq and Afghan wars would be successful or promptly concluded, and thought the same about the Vietnam one.
Many professional soothsayers are more cautious than the average prophet. Hence, their predictions are so hedged and equivocal that they are not very helpful. Perhaps they should be called to be responsible.
Most analysts nowadays state that the economy will remain buoyant for the foreseeable future, and that consequently the prospects for the stock market are very favourable. Maybe. These analysts are paid handsomely for their eagerly sought views, which frequently lead to injudicious investment decisions.
In any event most predictions must be viewed sceptically by the general public, particularly in view of the widespread optimism about our economic prospects.