Forecasting the future, especially a year ahead, is inherently difficult and some may say, impossible, because it relies on conditions for the prescribed scenario happening. This seldom happens and as we know, no battle plan survives contact with the enemy. World events get in the way.

What is needed is understanding of the connections between cause and effect and how events will impact markets upon receipt of new information. No-one knows what is going to happen to oil and commodity prices, trade disputes, war, volcanic activity, epidemics etc. etc.

Fund managers and analysts might think they live in a world of certainly and control but it can be argued that they do not. They have no control over index values or what happens to individual stock prices nor certainly as to what is going to impact them and by how much.

So, what is the solution? Scenarios should be modeled to see what the results would be. Oil at $30, oil at $150, Mexico border shut, 10% inflation in the US, hard Brexit, FED and ECB tightening, Italy defaulting on debt, fully floating Renmimbi etc etc. None of these things might happen but at least if the models exist then key milestones which give clues about the developing story will be available.

Confessing after the event what "we never thought it would happen so we did no scenarios around it" never looks clever.