Lessons from 2016: Predicting an event is extremely difficult. With the benefit of hindsight, anyone can be a fortune teller.
That’s probably because we tend to remember our rationalisations post an event, not our predictions. For pension funds, interest rate predictions have been made explicitly and implicitly. Over the years, we have often heard statements like ‘from this point on, interest rates can only go up’, but the harsh reality of continuously low interest rates crushed the hopes of many pension fund investors.
To illustrate the difficulties in predicting global events and the subsequent reactions of the financial markets, let’s take a closer look at the Brexit vote in 2016. Once the referendum was announced, countless predictions were made on what Brexit would mean for markets, but few of those predictions came true.
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