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Welcome to Fidelity

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Willkommen bei Fidelity

Wählen Sie Ihren Standort aus, damit wir Ihnen die für Sie passenden Informationen anzeigen können.

Important information

I confirm that I am accessing this website for the purpose of acquiring information as, or for, an Institutional Investor (a corporate or other non-retail investor acting for their own account).

By accessing the restricted area I confirm my agreement with‚ and understanding of‚ the following terms of use and the legal provisions. If I do not agree to the terms and legal conditions‚ I must not access this website or any pages thereof. I acknowledge that access to the information contained on this website is available to "Qualified Investors" only as defined below. A private individual or legal representative or any other party without this qualification should not enter this website.

By accessing this website or any of its pages‚ I confirm that I am a qualified investor in accordance with Art 10.3 CISA.

The following are considered to be qualified investors:

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I understand the information contained in this website is not directed at, nor is it intended for distribution to, or use by, persons in any jurisdiction in which the dissemination of such investment related information is not permitted. I also understand that the information contained in this site is not directed to any party that may be defined as a ‘retail investor’ by the home regulator of the country in which the website is being accessed. I understand that the information or opinions contained herein should not be construed as an offer to sell or the solicitation of an offer to buy any investment product nor shall any such investment products or services be offered or sold to any person in any jurisdiction in which such offer, solicitation, purchase or sale would be unlawful. Fidelity has expressed its own views and opinions on this website, and these may change and there is no obligation to update them. Nothing in this website should be construed as investment, tax, legal or other advice. The information contained herein is subject to change without notice.

I understand the information contained in this website is not directed at, nor is it intended for distribution to, or use by, persons in any jurisdiction in which the dissemination of such investment related information is not permitted. I also understand that the information contained in this site is not directed to any party that may be defined as a ‘retail investor’ by the home regulator of the country in which the website is being accessed. I understand that the information or opinions contained herein should not be construed as an offer to sell or the solicitation of an offer to buy any investment product nor shall any such investment products or services be offered or sold to any person in any jurisdiction in which such offer, solicitation, purchase or sale would be unlawful. Fidelity has expressed its own views and opinions on this website, and these may change and there is no obligation to update them. Nothing in this website should be construed as investment, tax, legal or other advice. The information contained herein is subject to change without notice.

This website has been issued by FIL Fund Management Limited, a Bermuda company licensed to conduct investment business by the Bermuda Monetary Authority. Neither FIL Fund Management Limited, its parent company FIL Limited, nor any of their group companies or affiliates makes or gives any warranty or representation that any information contained on this website is accurate, complete, or fit for any particular purpose.

I acknowledge that neither FIL Fund Management Limited, FIL Limited, nor any of their group companies or affiliates will have any liability for any losses arising directly or indirectly from any information accessed from this website. By accepting this representation I also confirm my agreement to the website Terms and Conditions, which I have read and understood.

Fidelity International, the Fidelity International logo and F symbol are trademarks of FIL Limited, a company existing under the laws of Bermuda.

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Je confirme accéder à ce site Internet afin d’obtenir des informations en qualité d’investisseur institutionnel.

Je comprends que les informations contenues sur ce site Internet sont destinées exclusivement aux investisseurs résidant en France et ne doivent pas être diffusées à quiconque pouvant être considéré comme un investisseur particulier. Je comprends que les informations ou opinions présentées sur ce site ne constituent pas des recommandations d’achat ou de vente. Fidelity a exprimé ses propres vues et opinions sur ce site Internet, et celles-ci peuvent évoluer sans que Fidelity n’assume aucune obligation de les actualiser. Aucun élément de ce site Internet ne doit être interprété comme un avis d’investissement, fiscal ou juridique ou autre. Les informations que comporte ce site peuvent changer sans notification.

Ce site Internet est présenté par FIL Gestion, SGP agréée par l'AMF sous le n°GP03-004, 29 rue de Berri, 75008 Paris. Ni FIL Gestion, ni sa société mère FIL Limited, ni aucune des sociétés ou affiliées du groupe ne garantit ni ne fait aucune déclaration sur l’exactitude, l’exhaustivité ou l’adaptation à une finalité donnée des informations présentées sur ce site Internet.

Je reconnais que ni FIL Gestion, ni FIL Limited, ni aucune des sociétés ou affiliées du groupe n’assume une quelconque responsabilité au titre de toute perte découlant directement ou indirectement de toute information obtenue à partir de ce site Internet.

Ce site présentant des informations en langues française et anglaise, j’accepte de recevoir des informations non exclusivement rédigées en français.

Je confirme également, par l’acceptation de cette déclaration, mon accord sur les conditions et modalités du site Internet que j’ai lues et comprises.

Fidelity, Fidelity International, le logo Fidelity International ainsi que le symbole F sont des marques déposées de FIL Limited.

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Wichtige Informationen

Hiermit bestätige ich, dass ich diese Website zur Informationsbeschaffung als institutioneller Anleger (ein auf eigene Rechnung handelndes Unternehmen oder ein anderer nicht als Privatanleger geltender Investor) bzw. für einen institutionellen Anleger besuche.

Mit dem Zugriff auf den zugangsbeschränkten Bereich bestätige ich, dass ich die folgenden Nutzungsbedingungen und rechtlichen Klauseln verstanden habe und mit ihnen einverstanden bin. Andernfalls darf ich auf diese Website oder Teile davon nicht zugreifen. Mir ist bewusst, dass der Zugang zu den Informationen auf dieser Website nur für „qualifizierte Anleger“ gemäss untenstehender Definition vorgesehen ist. Eine Privatperson, ein rechtlicher Vertreter oder irgendeine andere Partei ohne diese Qualifikation sollte nicht auf diese Webseite zugreifen.

Mit dem Zugriff auf diese Website oder Teile davon bestätige ich, dass ich ein qualifizierter Investor gemäß Art 10 Absatz 3 des schweizerischen Bundesgesetzes über die kollektiven Kapitalanlagen bin.

Als qualifizierte Anlegerinnen und Anleger im Sinne dieses Gesetzes gelten:

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Mir ist bewusst, dass sich die Informationen auf dieser Website nicht an Personen richten bzw. für sie bestimmt sind, in deren Land die Verbreitung solcher anlagebezogenen Informationen nicht erlaubt ist. Mir ist bewusst, dass die hier zu findenden Informationen oder Meinungen nicht als Aufforderung zum Kauf oder Verkauf eines Anlageprodukts zu verstehen sind. Es sollen auch keine solchen Anlageprodukte oder Dienstleistungen Personen angeboten oder verkauft werden, in deren Land ein entsprechendes Angebot, eine Aufforderung, ein Erwerb oder Verkauf ungesetzlich wäre. Fidelity äußert auf dieser Website seine eigenen Ansichten und Meinungen, die sich jederzeit ändern können, ohne dass eine Verpflichtung zur Aktualisierung besteht. Kein Inhalt dieser Website ist als Beratung in Bezug auf Geldanlagen, Steuern, rechtliche oder sonstige Aspekte zu verstehen. Die hierin enthaltenen Informationen können sich ohne entsprechende Mitteilung jederzeit ändern.

Mir ist bewusst, dass sich die Informationen auf dieser Website nicht an Personen richten bzw. für sie bestimmt sind, in deren Land die Verbreitung solcher anlagebezogenen Informationen nicht erlaubt ist. Mir ist ebenfalls bewusst, dass sich die Informationen auf dieser Website nicht an Adressaten richtet, die von der Aufsichtsbehörde in dem Land, von dem aus die Website besucht wird, möglicherweise als „Privatanleger“ klassifiziert werden. Des Weiteren ist mir bewusst, dass die hier zu findenden Informationen oder Meinungen nicht als Aufforderung zum Kauf oder Verkauf eines Anlageprodukts zu verstehen sind. Es sollen auch keine solchen Anlageprodukte oder Dienstleistungen Personen angeboten oder verkauft werden, in deren Land ein entsprechendes Angebot, eine Aufforderung, ein Erwerb oder Verkauf ungesetzlich wäre. Fidelity äußert auf dieser Website seine eigenen Ansichten und Meinungen, die sich jederzeit ändern können, ohne dass eine Verpflichtung zur Aktualisierung besteht. Kein Inhalt dieser Website ist als Beratung in Bezug auf Geldanlagen, Steuern, rechtliche oder sonstige Aspekte zu verstehen. Die hierin enthaltenen Informationen können sich ohne entsprechende Mitteilung jederzeit ändern.

Diese Website wurde von FIL Fund Management Limited eingerichtet, einem Unternehmen mit Sitz auf bzw. nach dem Recht der Bermuda-Inseln, das über eine Genehmigung der Bermuda Monetary Authority zur Ausübung von Investmenttätigkeiten verfügt. Weder FIL Fund Management Limited noch sein Mutterunternehmen FIL Limited oder irgendein anderes Konzernunternehmen oder verbundenes Unternehmen übernimmt die Gewähr dafür oder erklärt, dass die Informationen auf dieser Website zutreffend, vollständig oder für jedwede Zwecke geeignet sind.

Ich erkenne an, dass weder FIL Fund Management Limited noch FIL Limited oder ein anderes Konzernunternehmen bzw. verbundenes Unternehmen für etwaige Verluste haftet, die direkt oder indirekt aus einer auf dieser Website beschafften Information resultieren. Durch Annahme dieser Erklärung bestätige ich auch mein Einverständnis mit den Nutzungs- und Geschäftsbedingungen dieser Website, die ich gelesen und verstanden habe.

Fidelity International, das Fidelity International Logo und das F-Symbol sind Markenzeichen von FIL Limited, einem nach dem Recht der Bermuda-Inseln eingetragenen Unternehmen.

Diese Website präsentiert Informationen in englischer und deutscher Sprache. Als professioneller Anleger akzeptiere ich hiermit, Informationen in mehr als einer Sprache zu erhalten.

Wenn die obige Erklärung zutrifft, klicken Sie bitte auf „Ich stimme zu“, um auf die Website zu gelangen.

Informazioni importanti

Confermo di voler accedere a questo sito web per acquisire informazioni in veste o per conto di un Investitore istituzionale (una società o altro investitore non retail che agisce per proprio conto).

Riconosco che le informazioni contenute in questo sito web non sono dirette né sono destinate alla distribuzione o all’uso da parte di soggetti in qualsiasi giurisdizione in cui la diffusione di tali informazioni relative allinvestimento non è consentita. Riconosco inoltre che le informazioni contenute in questo sito web non sono dirette a soggetti che potrebbero essere definiti "investitori retail" dall'autorità di vigilanza nazionale del paese dal quale si accede al sito stesso. Riconosco che le informazioni o le opinioni contenute in questo sito web non devono essere interpretate come un'offerta di vendita o come la sollecitazione di un'offerta di acquisto di un prodotto o un servizio di investimento, né tali prodotti o servizi di investimento possono essere offerti o venduti a soggetti di giurisdizioni nelle quali tale offerta, sollecitazione, acquisto o vendita sarebbero illegali. Questo sito web contiene giudizi e opinioni espressi da Fidelity, che sono soggetti a modifica e rispetto ai quali non sussiste alcun obbligo di aggiornamento. Nulla di quanto contenuto in questo sito web va considerato come una consulenza di investimento, fiscale, legale o di altra natura. Le informazioni qui riportate sono soggette a modifica senza preavviso.

Questo sito web è pubblicato da FIL Fund Management Limited (una società delle Bermuda autorizzata a svolgere attività d'investimento dalla Bermuda Monetary Authority). Né FIL Fund Management Limited, né la sua società madre FIL Limited, né alcuna delle loro società del gruppo o affiliate fornisce o rilascia alcuna garanzia o dichiarazione che le informazioni contenute in questo sito web siano accurate, complete o adatte a uno scopo particolare.

Riconosco che né FIL Fund Management Limited, né FIL Limited né alcuna delle loro società del gruppo o affiliate si assumono alcuna responsabilità per eventuali perdite derivanti direttamente o indirettamente da informazioni ottenute da questo sito web. Accettando questa dichiarazione confermo anche di aver letto, compreso e accettato i Termini e le condizioni d'uso del sito web.

Fidelity International, il logo Fidelity International e il simbolo F sono marchi di proprietà di FIL Limited, una società costituita nelle Bermuda.

Se la dichiarazione di cui sopra è corretta, cliccare "Accetto" qui sotto per continuare a visitare il sito.

重要な情報

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当ウェブサイトはバミューダ籍の法人でバミューダ金融庁から投資事業免許を取得しているFILファンド・マネジメント・リミテッドが作成しています。FILファンド・マネジメント・リミテッド、その親会社であるFILリミテッド、またはそれらのグループ会社か関連会社のいずれも、当ウェブサイトに掲載される情報が正確であるとか、完全であるとか、特定の目的に適合したものである等の保証や表明は行っておらず、そういった保証や表明を提供することもありません。

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フィデリティ・インターナショナル、フィデリティ・インターナショナルのロゴおよびFのシンボルはバミューダ法の下で設立された法人であるFILリミテッドの商標です。

以上をご確認いただける場合には、以下の「同意します」ボタンをクリックしてください。

Important information

I confirm that I am accessing this website for the purpose of acquiring information as, or for, an Institutional Investor (a corporate or other non-retail investor acting for their own account).

I understand the information contained in this website is not directed at, nor is it intended for distribution to, or use by, persons in any jurisdiction in which the dissemination of such investment related information is not permitted. I also understand that the information contained in this site is not directed to any party that may be defined as a ‘retail investor’ by the home regulator of the country in which the website is being accessed. I understand that the information or opinions contained herein should not be construed as an offer to sell or the solicitation of an offer to buy any investment product nor shall any such investment products or services be offered or sold to any person in any jurisdiction in which such offer, solicitation, purchase or sale would be unlawful. Fidelity has expressed its own views and opinions on this website, and these may change and there is no obligation to update them. Nothing in this website should be construed as investment, tax, legal or other advice. The information contained herein is subject to change without notice.

This website has been issued by FIL Fund Management Limited, a Bermuda company licensed to conduct investment business by the Bermuda Monetary Authority. Neither FIL Fund Management Limited, its parent company FIL Limited, nor any of their group companies or affiliates makes or gives any warranty or representation that any information contained on this website is accurate, complete, or fit for any particular purpose.

I acknowledge that neither FIL Fund Management Limited, FIL Limited, nor any of their group companies or affiliates will have any liability for any losses arising directly or indirectly from any information accessed from this website. By accepting this representation I also confirm my agreement to the website Terms and Conditions, which I have read and understood.

Please note that FIL Fund Management Limited is not licensed by the Liechtenstein Financial Market Authority (“FMA”) and is not subject to the supervision of the FMA.

Fidelity International, the Fidelity International logo and F symbol are trademarks of FIL Limited, a company existing under the laws of Bermuda.

If the above representation is correct, please click 'I agree' below to continue to the site.

Wichtige Informationen

Hiermit bestätige ich, dass ich diese Website zur Informationsbeschaffung als institutioneller Anleger (ein auf eigene Rechnung handelndes Unternehmen oder ein anderer nicht als Privatanleger geltender Investor) bzw. für einen institutionellen Anleger besuche.

Mir ist bewusst, dass sich die Informationen auf dieser Website nicht an Personen richten bzw. für sie bestimmt sind, in deren Land die Verbreitung solcher anlagebezogenen Informationen nicht erlaubt ist. Mir ist ebenfalls bewusst, dass sich die Informationen auf dieser Website nicht an Adressaten richtet, die von der Aufsichtsbehörde in dem Land, von dem aus die Website besucht wird, möglicherweise als „Privatanleger“ klassifiziert werden. Des Weiteren ist mir bewusst, dass die hier zu findenden Informationen oder Meinungen nicht als Aufforderung zum Kauf oder Verkauf eines Anlageprodukts zu verstehen sind. Es sollen auch keine solchen Anlageprodukte oder Dienstleistungen Personen angeboten oder verkauft werden, in deren Land ein entsprechendes Angebot, eine Aufforderung, ein Erwerb oder Verkauf ungesetzlich wäre. Fidelity äußert auf dieser Website seine eigenen Ansichten und Meinungen, die sich jederzeit ändern können, ohne dass eine Verpflichtung zur Aktualisierung besteht. Kein Inhalt dieser Website ist als Beratung in Bezug auf Geldanlagen, Steuern, rechtliche oder sonstige Aspekte zu verstehen. Die hierin enthaltenen Informationen können sich ohne entsprechende Mitteilung jederzeit ändern.

Diese Website wurde von FIL Fund Management Limited eingerichtet, einem Unternehmen mit Sitz auf bzw. nach dem Recht der Bermuda-Inseln, das über eine Genehmigung der Bermuda Monetary Authority zur Ausübung von Investmenttätigkeiten verfügt. Weder FIL Fund Management Limited noch sein Mutterunternehmen FIL Limited oder irgendein anderes Konzernunternehmen oder verbundenes Unternehmen übernimmt die Gewähr dafür oder erklärt, dass die Informationen auf dieser Website zutreffend, vollständig oder für jedwede Zwecke geeignet sind.

Ich erkenne an, dass weder FIL Fund Management Limited noch FIL Limited oder ein anderes Konzernunternehmen bzw. verbundenes Unternehmen für etwaige Verluste haftet, die direkt oder indirekt aus einer auf dieser Website beschafften Information resultieren. Durch Annahme dieser Erklärung bestätige ich auch mein Einverständnis mit den Nutzungs- und Geschäftsbedingungen dieser Website, die ich gelesen und verstanden habe.

Fidelity International, das Fidelity International Logo und das F-Symbol sind Markenzeichen von FIL Limited, einem nach dem Recht der Bermuda-Inseln eingetragenen Unternehmen.

Bitte beachten Sie, dass die FIL Fund Management Limited von der Finanzmarktaufsicht Liechtenstein weder zugelassen noch beaufsichtigt ist.

Diese Website präsentiert Informationen in englischer und deutscher Sprache. Als professioneller Anleger akzeptiere ich hiermit, Informationen in mehr als einer Sprache zu erhalten.

Wenn die obige Erklärung zutrifft, klicken Sie bitte auf „Ich stimme zu“, um auf die Website zu gelangen.

Illustration: Paula Rivas

Forecasting markets in 2029: 10 years is a long time in finance

by David Buckle

Published 16 January 2019

Strategic asset allocationForecastingCapital Markets

While it is impossible to know with 100 per cent accuracy what 2029 will bring for financial returns, a detailed forecast of equilibrium rates is an essential part of designing investment strategies to meet client objectives.

The world in 2029 will be different, if quite recognisable. But try to visualise it clearly and your mind will naturally project forward from what you know now, so you’ll be wrong. The Horse Manure Crisis of the turn of the 20th century is a good example of this behavioural quirk in action.1

In 1898, the greatest minds of the era met at the world’s first international urban planning conference in New York, a city with around 100,000 horses producing over 1,000 metric tons of manure a day. They estimated the city would be drowned in a sea of manure three-stories high within a few decades; likewise, the streets of London would be buried under nine feet of horse dung. Urban civilisation appeared to be doomed. The conference itself was abandoned after only three days out of a planned 10, due to a lack of agreement over what should be done.

But this particular apocalypse failed to materialise. Horses were on their way out and within 14 years, automobiles outnumbered horses on the streets of New York, substantially reducing the output of manure and the severity of the problem. The forecast, albeit a very reasonable one, was crap.

The tale is a useful reminder that forecasting real-world events is difficult and rarely precisely accurate, even for experts. Yet, in the financial world at least, the practice of forecasting capital market returns has real value. We don’t expect these numbers to be 100 per cent accurate, instead we are predicting what might be reasonable to expect.

What are long-term forecasts used for?

At Fidelity, we use long-range market forecasts to help assess the feasibility of client objectives and to help design investment strategies to meet those client objectives.

For example, clients come to us with return targets they wish to achieve over a time horizon and under some constraints. Initially, the long-range forecasts are used to determine if we think that is likely to be achievable or whether alternative approaches need to be considered. The forecasts are then used as a starting point for investment solutions design.

What we talk about when we talk about 10-year forecasts

Forecasting the long-term performance of different assets is a complex process. To make it manageable, it’s useful to break down expected returns into building blocks. The core building block is the risk-free rate, or return on cash, which is the starting point for expected returns on all assets.

There is a theoretical link between an economy and the price of financial assets; a country’s interest rate should be similar to the growth rate of economic output. The interest rate is defined as the return on a risk-free investment, while risk-bearing investments have an additional premium.

As a result, to project 10-year investment returns, we forecast the future rate of nominal GDP growth, project the interest rate given that path and build a projection for the risk-asset premium on top of that interest rate.

Chart 1: Building a 10-year capital market forecast

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Source: Fidelity International, 2019

For all input variables in our models, we consider the future in three phases: the short-term, a long-term equilibrium state and a transition from the former to the latter. Equilibrium is a theoretical state of the world where economic growth, employment, and inflation are stable. The concept of equilibrium only applies in the distant future when averaged over many economic cycles. It is far less relevant in the short-term, where instead we rely on the analysis of relevant Fidelity experts. We use statistical models to project the convergence from short-term to equilibrium.

In the shorter term, these economic cycles lead to fluctuations of the risk-free rate and risk premia. Beyond this, we project paths towards our equilibrium estimates, which we use to compute returns.

Forecasting nominal GDP

Put simply, economic output is the value of all that a country produces. This can be considered as the number of things that are made, multiplied by the price of each one. Therefore, the rate of growth of economic output comprises real GDP (output measured in terms of quantity) and inflation.

Forecasting real GDP

Short-term forecasts are driven by our proprietary economic indicators, including the Fidelity Leading Indicator (FLI) and the Gauges of Economic Activity in Real-time (GEARs). We then use a long-term model to provide an expected path from our short-term outlook to equilibrium where growth is stable. The equilibrium state of economic growth is estimated by considering physical capital, labour force size, technological progress and productivity gains from education. This equilibrium takes no account of an economic cycle but instead measures what such a cycle oscillates around.

Chart 2: US growth projection

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Source: Fidelity International, 2019

Forecasting inflation

Fidelity has a large index-linked bond business for which inflation analysts make short-term forecasts. These analysts consider components of the inflation index, assessing recent trends and seasonal price patterns in the component goods and services. They consider policy changes, including tax changes and pre-announced price changes.

For forecasts longer than two years, we switch to an economic model of inflation. This long-term model considers economic indicators such as slack in the labour market, to determine the path of inflation.

Chart 3: How we make US inflation forecasts

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Source: Fidelity International, 2019

Cash

A country’s interest rate is set by the central bank, usually within a monetary policy framework. Whilst in the short-run, that monetary policy is governed by an outlook for the country’s economy - especially inflation - in the long-run the equilibrium interest rate should, theoretically, be slightly lower than the rate of economic growth.

To project a path of interest rates from today to equilibrium, we take a view on future central bank policy. First, we consider what the near term monetary policy of each central bank is likely to be. This requires an analysis of the communication from each central banks’ monetary policy committee. Second, we consider how the central bank will react as our projected growth and inflation scenario progresses. Finally, we project convergence of the interest rate to equilibrium.

Bonds

Bonds are split into government bonds and corporate bonds, where government bonds comprise the risk-free rate plus a term premium and corporate bonds are modelled as government bond yields plus a credit spread.

Government yields are made up of the risk-free rate plus a term premium, which is set using the views of Fidelity’s economists, fund managers and analysists in the short term, and trending towards an equilibrium rate in the long term.

Corporate yields are modelled as government yields plus a credit spread. This spread is an expression of the premium investors demand for the extra risk, based on the view that corporate bonds may have a greater risk of default, and are traded in less liquid markets, than sovereign bonds. Default rates are modelled as a function of interest rates and GDP. Once computed, liquidity and credit premium can be derived as a function of them. Summing these elements generate spreads which are projected by rating (AAA to C) and by maturity.

Government and corporate bond index yields are computed by aggregating across credit ratings and maturities.

Equity risk premia example

The equity forecast is based on the corporate fundamentals of every company in an index. A short-term view of those fundamentals is derived using the estimates of Fidelity’s teams of equity analysts. We then use a model that is guided by our projections for economic growth, inflation and bond yields to predict a path from this short-term expectation to a long-term steady state where earnings growth, pay-out ratios and price-earnings ratios are constant.

Chart 4: How we make equity market forecasts

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Source: Fidelity International, 2019

Future behaviour

Capital market assumptions are intended as a general guide to the future, rather than a detailed street map. It is close to impossible to forecast the future precisely, so instead we try to reflect what would be a reasonable assessment of the capital markets in 10 years’ time. The Capital Market Assumptions (CMAs) take into account the limits of the human mind’s ability accurately to weigh future outcomes.

Corporate executives and investors often rely too much on their own experience in making forecasts, prioritising the inside view over the outside view. Academics who study decision making examined how executives make strategic choices and found that they often depend on a single analogy or a handful of experiences that readily come to mind. Microsoft Founder Bill Gates has provided a few good examples. In 1981, he reportedly said: “No one will need more than 637KB of memory [RAM] for a personal computer. 640KB ought to be enough for anybody.” Twelve years later he was quoted as saying: “The internet? We’re not interested in it.5” Luckily for him, and the company’s shareholders, his outlook stayed flexible.

When calculating the CMA’s, we don’t just extrapolate what’s happened in history. We take the views of central banks, along with Fidelity’s economists and analysts to project future paths to get to these return expectations.

Conclusion

Narratives are useful in forecasting. They help identify opportunities for action based on a cause-and-effect analysis. However, they must be balanced with robust design and statistical rigour to avoid the sort of myopic thinking to which humans are prone. We don’t expect hindsight to prove our forecasts were perfect, but they remain a critical tool for solutions design and investment planning when built and used in the right way. So, the world of 2029 might not match the estimates to the decimal point, but we can be confident the forecast is manure free.

References

1: The Great Horse Manure Crisis, Foundation for Economic Education

2: Mauboussin, M., Callahan, D., Majd, D. (2016), The Base Rate Book

3: Moore, D., Haran, U. (2014), A Better Way to Forecast

4: Schacter, D. L., Addis, D. R., Buckner, R. L. (2008). Episodic simulation of future events: Concepts, data, and applications.

5: FT Briefing: Microsoft and the internet (2005). https://www.ft.com/content/b33397b8-5137-11da-ac3b-0000779e2340

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