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What to Expect from Markets in 2028: Why Not to Forecast and How to Think in Scenarios
Key takeaways
- Financial forecasts have systematically poor predictive value — this is not cynicism, but an empirically documented fact.
- Scenarios are not forecasts: they describe conditions, not outcomes, and help prepare a portfolio for multiple futures at once.
- Appropriate allocation and DCA are strategies that work regardless of which scenario materialises.
- The most dangerous response to forecasts is a dramatic portfolio change based on them — that is precisely what to avoid.
Every January, financial websites are flooded with forecasts: where the index will be at year-end, what central banks will do, which economy will grow fastest. The problem is that these numbers are largely unreliable — and reacting to them by changing your portfolio is one of the most costly investment mistakes.
Why forecasts don't work
Research repeatedly shows that the average accuracy of analysts' and economists' annual forecasts is statistically close to random. The financial system is a complex adaptive system — it reacts to its own predictions, is influenced by millions of unrelated decisions, and is subject to "black swans" that are by nature unpredictable. Institutional investors with access to non-public data and the best models also repeatedly miss these forecasts.
This does not mean that the macroeconomic context is worthless — quite the opposite. But there is a fundamental difference between understanding context and betting on a specific number.
What scenarios are and why they are better
Scenario thinking does not predict — it describes conditions. Instead of asking "where will the S&P 500 be at year-end?" it asks: "How would my portfolio react in a higher-inflation environment? Or in a recession? Or in a continued growth environment?" Then you prepare your portfolio for multiple futures rather than betting on one.
Three basic scenarios worth keeping in mind for any given year:
- Soft landing (base case): Economic growth continues, inflation stabilises, central banks gradually ease. Equity markets perform reasonably well.
- Stagflation or persistent inflation: Bond yields rise, equities under pressure, real assets and commodities benefit.
- Recession or shock: Sell-off in risk assets, safe havens (cash, gold, government bonds) in demand.
What to do as an investor
Scenarios serve one purpose: to verify whether your portfolio is robust. If one of the above scenarios would seriously harm you, that is a signal to review your allocation — not because that scenario will happen, but because it can. Projections and simulations help you see how your portfolio performs under different conditions.
To learn more about how to correctly understand and measure investment risk, read our article on risk. If you are looking for a specific strategy for different environments, browse the ETF Navigator.
FAQ
If forecasts are worthless, why do so many analysts publish them?
Forecasts have marketing and PR value for the firms that issue them. They also fulfil investors' psychological need for an "estimate" — even a bad estimate subjectively reduces uncertainty, even if it objectively changes nothing.
How should I react when I see a prominent forecast for 2028 in the media?
Read it as one data point, not as an instruction to act. Ask yourself: what are the author's assumptions? How far from consensus is this forecast? And above all — what would have to happen for it to turn out to be wrong?
Is Dollar-Cost Averaging (DCA) a strategy suitable for all scenarios?
DCA — investing a fixed amount at regular intervals regardless of price — works well as a scenario-agnostic strategy. You buy cheaper in downturns and more expensively in rallies, resulting in an averaged entry price. More in our article on DCA.