Most economic forecasts consist of extrapolations of current levels and long-term trends. And since the economy usually doesn’t depart much from those levels and trends, most extrapolation forecasts turn out to be correct. But those extrapolation forecasts are likely to be commonly shared, already reflected in the market prices for assets, and thus not generators of superior performance—even when they come true. Here’s how Nobel Prize–winning economist Milton Friedman put it:
