14 B Baselines The fallacy of forecasting The fallacy of forecasting is based on the stable, historic baseline. The best predictor of next year's budget and strategy is this year's budget and strategy. The assumed baseline for next year's performance is last year's performance with some sort of historical trend extrapolated into the future. For a laugh, look at a five-year plan from five years ago. Its projections for today will bear no resemblance to the reality of today, unless you are a monopoly in a static industry. Part of the problem comes from unpredictable external shocks, from the internet, through takeovers, government intervention and recessions. Inability