The Perils of Short-Term Forecasting: Lessons Across Industries for Analysts
The Perils of Short-Term Forecasting: Lessons Across Industries Forecasting is as much an art as it is a science. Yet history shows that analysts often fall into the trap of extrapolating recent performance, ignoring longer cycles of valuation, regulation, or technological change. This tendency to focus narrowly on short-term data has led to some of the most notable misjudgments across finance, healthcare, technology, and beyond. Stock Market Missteps In 1929, economist Irving Fisher famously declared that stock prices had reached a “permanently high plateau.” His optimism, rooted in the roaring 1920s bull market, overlooked the decade-long buildup of speculative debt and overvaluation. The result was the Great Depression crash. Similar errors resurfaced during the dot-com bubble of the late 1990s. Analysts such as James Glassman predicted the Dow would soar to 36,000, extrapolating short-term tech stock surges while ignoring unsustainable valuations and lack of profits. The...