Part 2/8:
The prevailing wisdom in the investing world reminds us that "past performance does not guarantee future results." While this is often cited as a disclaimer, one can't help but wonder about the true implications of this statement. If historical performance is not a reliable indicator for what lies ahead, what alternatives do investors have for forecasting outcomes?
Economic forecasts effectively come neck-and-neck with predictions that can seem as random as the flip of a coin. Thus, the cyclical argument emerges: Are we simply bound to rely on the past, even though it's represented as fundamentally unreliable? This dichotomy underlies a larger question — if we cannot fully predict the future, then what is the purpose of our historical research?