Posted on by kruijs

Prediction Markets — How to protect yourself from ‘prediction addiction’

By Tom Stevenson, The Telegraph, November 18, 2013

In a few weeks’ time a Christmas tradition as familiar as brandy butter and tinsel will kick off: the annual round of market predictions. It’s a bit of fun and in a year’s time no one will remember anyone’s forecasts. This is just as well because the one really predictable thing is that most of them will turn out to be horribly wrong.

Hardly a day goes by when we are not reminded of the folly of forecasting. Inflation rises less than we expect but employment is up by more; company results are better or worse than forecast; interest rates are cut out of the blue while events that look a racing certainty (Fed “taper”, anyone?) fail to show up. If we can’t get these short-term predictions right, what hope should we have of nailing the longer-term outlook?

Now then, where do I think the FTSE 100 will be next Christmas?

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