Economic forecasts are both an art and a science. They require a delicate interplay between hard facts, data and industry know-how, alongside a deep understanding of human nature, an appreciation for history and a keen eye for trends. In our business, track records are everything.
Given the value of accurate and insightful predictions for investors, industries and economies, Citadel is proud to announce that we have emerged as the highest ranked institutional participant for overall forecasting performance in an analysis conducted by the School of Economics at the University of Cape Town.
This achievement is testament to the robust process designed and curated by our dedicated people. For the past 26 years, Citadel’s macro-economic framework has set the scene for our entire investment process. This academic finding clearly supports what our clients have long known to be true: that Citadel’s quality advice and insights continue to differentiate us in a crowded and competitive industry.
The study by Professor Corné van Walbeek and Michael Kilumelume, entitled Analysis of Media24’s “Economist of the Year Forecasting Competition”, studied the accuracy of forecasts by South African economists – 21 individuals and eight institutions – since 1998. The authors set out to show how accurate forecasts can be.
The value of this study lies in the importance vested in such forecasts by those active in the market. As Van Walbeek and Kilumelume note in their paper: “Much depends on accurate economic forecasts. For example, the accuracy of the underlying assumptions on which a large investment project is based has a major impact on the profitability of that project. In a different context, the debate about the relative merits of actively-managed unit trusts and passive unit trusts pivots on whether the actively-managed unit trust manager can outperform the market by predicting individual stocks’ future returns better.”
Interesting, over the 14-year period, the consensus (average) forecast of all the entrants ultimately outperformed any single forecaster – highlighting the importance of taking a wide array of views into consideration when attempting to predict future events. This also supports Citadel’s collaborative in-house approach, which ensures a range of views and insights are taken into account when formulating our investment scenarios.
Congratulations to the Citadel Asset Management team. In our volatile and unpredictable world, never has your artistry held greater value to us and our clients.