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In financial markets, accurate forecasts matter. Those who have correctly predicted an event in the past are therefore often regarded as geniuses. Wrongly so, says Thorsten Fischer, Managing Director and Head of Portfolio Management at Moventum AM. This is because a forecast alone says little about the quality of the underlying analysis or investment strategy. “A good strategy,” says Fischer, “does not rely on geniuses, but weights probabilities.”

Investing is about future returns. People who appear to know the future are therefore held in high regard. One financial strategist, for example, correctly predicted the football World Cup winners in 2014, 2018 and 2022, and now sees the Netherlands as the winner of the 2026 World Cup. “The real story, however, is not his hit rate, but how quickly people confuse successful predictions with particular expertise,” Fischer explains. A correct forecast does not necessarily have to be based on correct analysis. Suppose an expert predicts a stock market crash on the basis of a flawed or entirely unfounded theory – and the crash actually occurs on schedule. Was he really right?

“Investors often celebrate successful fund managers as geniuses and are quick to dismiss weaker investors as incompetent,” says Fischer. Yet short-term results are often a mixture of skill, market environment and chance. The difficulty lies in separating these factors from one another. “Someone who is right over several years may have a genuine informational advantage,” says Fischer. But perhaps they are simply benefiting from an exceptionally favourable series of events. “That is precisely why past success should never be the sole benchmark for investment decisions.”

“Good investors think in probabilities,” says Fischer, “not in certainties.” One reason for this is that chance plays a greater role in life than we would like to admit. People strive to control their environment and therefore tend to underestimate the importance of unpredictable chance. “Whether in football, the economy or financial markets, countless factors influence the outcome in complex systems,” says Fischer. Individual events can decisively alter the result. “Nevertheless, we tend to present successful forecasts retrospectively as the logical consequence of events.” After all, only when things follow logically from one another do they become understandable, predictable and therefore controllable.

The need for control is also satisfied by increasingly complex forecasting models. However, more data does not automatically mean better predictions. What is particularly interesting is that, while simple models can sometimes be surprisingly accurate, highly complex forecasting models are regularly wide of the mark. “This shows that even sophisticated analysis cannot eliminate uncertainty – it can only structure it better,” Fischer explains.

In Fischer’s view, the most dangerous trap in forecasting is the illusion of precision. In financial markets, models, forecasts and price targets often create the impression of scientific accuracy. In reality, many forecasts are subject to considerable uncertainty. Precise figures should therefore not be confused with a high degree of forecasting certainty.

Fischer’s conclusion: good investors think in probabilities, not in certainties. “The most successful investors do not try to predict the future with absolute precision,” he says. “Instead, they work with scenarios, probabilities and robust portfolios that continue to function even when forecasts turn out to be wrong.” What does this mean for investors? “The most important lesson is humility,” says Fischer. Forecasts, market views and even the best models provide guidance, but not certainty. Successful investing is therefore based less on perfectly predicting the future than on diversification, risk management and the ability to deal with uncertainty. “That,” says Fischer, “is what separates successful long-term investors from knights of short-lived fortune.”