The Problem With Financial Forecasts Is They’re Usually Wrong
On this episode of Merryn Talks Money, we discuss why we use them anyway.
Photographer: Spencer Platt/Getty Images
Financial forecasting is a mainstay of finance and economics. Banks use them to analyze how well a company should be doing a few years from now; governments use them to set their budgets. But how often are those prognostications—on which so much depends— actually accurate? Not very often, according to Daniel Rasmussen, founder of Verdad Advisers, author of The Humble Investor: How to Find a Winning Edge in a Surprising World and guest on this week’s episode of Merryn Talks Money.
“Tell me what your year-end bank balance is going to be in 2030?” Rasmussen posits to host Merryn Somerset Webb. “And if you can't do that accurately, why do you think you can do it for Coca-Cola?”