Friday, 29 December 2006

New Year Predictions

The New Year is traditionally a time when the press reviews the year that has just ended and the year that is about to commence. There is a plethora of material in this vein. We normally point people to 'The World In ...' series by The Economist as a reasonably authoratitive source (see magazine link). The World in 2007 has a number of interesting articles - we particularly like Angela Merkel's vision of Europe. This year, we are also recommending a longer article in The Business as being of interest (see article link). In our view, this is a useful reminder that, in the markets, what goes up can also come down again.

The reviews of the year ahead always contain a number of predictions for the future. As futurists, we try to avoid making too many point estimates for the future. It is more interesting to provide a number of range estimates as to what the future might hold. This gives us more material to work with and recognises that the future is not pre-determined. This is one of the lessons that we try to instil into our Interns at an early stage. To underline it, we ask them to take an old copy of 'The World In ...' series and to update us on a number of predictions.

For example, in 'The World In 1997', we were told:
"British voters in 1997 will eject the Conservatives after 18 years and, without enthusiasm, elect a new government under Tony Blair. As a result, Britain will not find a new world role: it will finally cease looking for one. Mr Blair, born in 1953, will be Britain's first genuinely post-imperial prime minister."
At one level, this forecast was wrong - Tony Blair is the most interventionist prime minister since Anthony Eden, who has involved the UK in more overseas adventures than the previous five prime ministers put together. However, at another level, the forecast was right. The entanglement in Iraq is deeply unpopular in the UK and a vast number of Britons have simply lost the taste for an imperial adventure. To us, this is an example of getting a trend right but a point forecast wrong.

We always have to keep in mind this reservation when we read about what the future holds. None of us knows for certain what the future will be - the best we can do is to discuss the ranges in which it might be located.

Happy New Year!

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