Uncommon truths - The Aristotle List - 10 improbable but possible outcomes for 2021
It is time to forget central scenarios and think about improbable but possible outcomes. Market sentiment is currently bullish, so our list of surprises has a negative tinge, though we also look for upside (these hypothetical predictions are our views of what could happen even if they do not necessarily form part of our central scenario).
Aristotle said that “probable impossibilities are to be preferred to improbable possibilities”, meaning that we find it easier to believe in interesting impossibilities (B52s on the moon, say) than in unlikely possibilities. The aim of this document is to seek those unlikely possibilities -- out-of-consensus ideas for 2021 that we believe have at least a 30% chance of occurring. The concept was unashamedly borrowed from erstwhile colleague Byron Wien, who recently published his 10 surprises for 2021.
We believe the biggest returns are earned (or the biggest losses avoided) by successfully taking out-ofconsensus positions. A year ago, the mood was mixed (and didn’t anticipate a global pandemic). Hence, our improbable but possible ideas were disparate (“Joe Biden wins the US presidential election”; “The price of carbon in the EU breaks above €30/t”; “Oil & gas outperforms technology in the US” etc). The mood now seems bullish, so our new list has a bearish tinge – do not expect it to be internally consistent.
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