The future is uncertain… but it doesn't matter

We're at the time of year when projections for the next 12 months take over the headlines in the financial press. The most reputable investment institutions

make their projections for the 2025 close of the S&P 500, the IPSA and the dollar's value, among others.

When examining the performance of these projections, we find that their accuracy is quite low. According to Bloomberg data over the last 25 years, the

Wall Street strategists estimated the level of the S&P 500 with an average error of more than 15%—in absolute value—and the “best” miss by more than 10%. What's more, in 4 of the last 5

years, all the analysts in the sample were more pessimistic than the return achieved by the index.

Locally, the result is similar; the Central Bank's survey of economists projected at the end of 2023 an exchange rate of around 850 pesos for the close of 2024.

Closer to the spot rate at that moment (880) than to the actual value (996). Similarly, the average of the projections for the IPSA in 2024 twelve months ago ended with an error

of a little over 7% vs. the index's closing level this past year.

All in all, we know there are structural relationships between assets and tools that allow building optimal investment policies, minimizing risks and planning

investments according to personal or family objectives. The future is uncertain… but it doesn't matter.

Original publication in La Segunda, January 23, 2025.