How to divine the future - without a crystal ball

“It is difficult to make predictions, especially about the future” is a popular aphorism and is often taken one step further by many to conclude that the exercise of forecasting is futile.

| 4 min read

Of course, it is true that making predictions about future events is tough. Even the supposedly best and brightest, seem no better able to draw reliable facts, ahead of time, from the future. A great example is the record of our central bankers. Quotes from Ben Bernanke in the run up to, “definitely not a Global Financial Crisis” in 2007, have not aged well, yet we still today hang onto every dialectic nuance from the Federal Reserve and countless others whose track record is equally terrible.

I prefer to flip this adage on its head and state that, certainly based on my observations, it is actually very easy to make predictions about the future, as I spend my life surrounded by a myriad of people making predictions in pretty much every aspect of my life. This constant barrage of ‘news from the future’ is only interrupted by the still greater annual tsunami of ‘New Year’ prophecies.

Why bother making predictions?

So, if all these predictions are so bad at divining the future, what’s the point? Well digging into my well-stocked selection box of sayings, the British army’s ‘seven Ps’ provides an answer. Proper Planning and Preparation Prevents Particularly* Poor Performance (*slight amendment to the original).

Simply put, our complicated world is only possible because of incredible amounts of planning and preparation. For example, you can’t ‘accidentally’ mass produce a world leading 3nm semiconductor chip, it requires decades of accumulated knowledge and billions of pounds of investment. In order to progress, we must imagine how to overcome the present day limits to create something even better and faster than currently exists.

Making predictions is therefore an essential and entirely natural prerequisite to our civilised world. Intriguingly and importantly, the fact such predictions are often wrong is not an impediment to our incredible progress.

The illusion of explanatory depth

So, as we look to plan and prepare for a better future, it is instructive to understand how our brains go about imagining this future. We can often feel that we don’t understand a new technology sufficiently to make an informed projection of the future. Well, the breaking news is that most of us don’t understand how the vast majority of the technology – that we are happy to use every day – works either. This is known as the illusion of explanatory depth. Essentially, once something becomes familiar, we feel like we understand it, however familiarity is a poor substitute for knowledge.

Given this insight, and the fact that often a new technology is a threat to an established technology, we should not be surprised that throughout history the initial mainstream opinion on countless revolutionary technologies (which went on to achieve global adoption,
albeit sometimes a decade or more later) ranged from scepticism, ridicule to outright hostility. Whether it was the luddites fearful of losing their jobs to the cotton and wool machines in the early 1800s, the doubt over Edison’s light bulb, or indeed the widely demonised Internet,
that had no use other than for criminals and pornography.

In light of these perspectives, how then can we best make sense of the vast array of predictions vying for our attention in 2024 and beyond? Well aside from a reliable crystal ball (please get in touch if you have one spare), I think curiosity is your greatest ally.

Remember that whilst ‘Curiosity killed the cat,’ the full saying finishes ‘but satisfaction brought it back’. We should all aim to be more curious in 2024.

About Mark

Mark joined the Norwich branch of Charles Stanley in 1998 and became Branch Manager in 2013. He manages investment portfolios for private individuals, trusts and charities both directly and working with financial advisers, solicitors and accountants. He holds a Master of Architectural Engineering MEng (Leeds University and Pennsylvania State University), is a Chartered Fellow of the Chartered Institute of Securities and Investments (CISI) and the President of the East Anglia Branch of the CISI. Mark lives with his wife and two children in rural Norfolk.

This article previously featured in our magazine for private clients, InFocus.

Nothing on this website should be construed as personal advice based on your circumstances. No news or research item is a personal recommendation to deal.

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