Investment avenues for 2012 can be recommended based on careful assessment of various scenarios that may pan out. The emphasis is more on action rather than on communicating a certain "outlook". I believe the investors are often flooded with too much "outlook" and too little "actionable input". Here is an attempt to focus on the matter.
I have used what is typically referred to as scenario-building exercise. This is a powerful technique implemented by military planners, oil explorers and geo-political experts. Simply put, according to scenario analysis, the final shape of the world is a function of a few key drivers. These drivers affect the intermediate variables, which, in turn, shape the future. The important factor to consider here is the parallel impact of a given driver on different variables. Thereafter, we can easily come down to a fairly small list of candidate scenarios of how the world would shape up.
Using scenario analysis, we are trying to overcome 2 common problems typically faced in our endeavor of investment advice too specific and inherently speculative prediction on one hand, and too general and anything-can-happen sort of pseudo-prediction on the other. Real life is hard to predict. The attempt , therefore, is to forecast as few different alternative futures as possible, and design an investment strategy in that light.
I have used what is typically referred to as scenario-building exercise. This is a powerful technique implemented by military planners, oil explorers and geo-political experts. Simply put, according to scenario analysis, the final shape of the world is a function of a few key drivers. These drivers affect the intermediate variables, which, in turn, shape the future. The important factor to consider here is the parallel impact of a given driver on different variables. Thereafter, we can easily come down to a fairly small list of candidate scenarios of how the world would shape up.
Using scenario analysis, we are trying to overcome 2 common problems typically faced in our endeavor of investment advice too specific and inherently speculative prediction on one hand, and too general and anything-can-happen sort of pseudo-prediction on the other. Real life is hard to predict. The attempt , therefore, is to forecast as few different alternative futures as possible, and design an investment strategy in that light.
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