The inflation pessimists were right. It now looks like UK CPI inflation will soon top 8% – although it is likely to come down after that, because if we hand all our money over to utility companies, no one else will be able to raise prices. price.

But what was this good call for?

In some ways it made money. Inflation pessimists would have correctly bought gold (which is up 13% from a year ago) and avoided conventional gilts, which are down 10% since the summer.

But many of us who weren’t expecting 8% inflation also held gold, simply because it’s sometimes a good way to diversify our portfolios. Likewise, many of us have avoided gilts on the grounds that their worst losses were worse than cash.

In other respects, however, inflation pessimism would not have served us so well. Anyone who had bought Bitcoin thinking it would protect them from drops in the value of “fiat money” is now sitting on a 26% loss in the past 12 months, albeit a profit since the summer. And while everyone who bought pegged gilts is sitting on a small 12-month profit, they’ve been losing money since the summer. In both assets, it took more than a proper inflation call to turn a profit.

And then there are the stocks. The All-Share Index is up 6% from a year ago, but flat since summer and down since winter. What’s remarkable about this is how utterly mundane it is. Looking at a chart of the index over the past few months, you would never guess that inflation is at its highest level in 30 years. You could easily have said the market was right but got inflation wrong, or vice versa.

Nor would a correct view of inflation have guaranteed the success of a stock picking strategy. If you had researched companies with pricing power, you would have gone for, say, Diageo (DGE) and well done – but, depending on when you bought, you would probably have lost Unilever (ULVR) and Reckitt Benckiser (RKT). And while you probably would have made money betting on larger commodity stocks such as Hull (SHEL) Where Rio Tinto (RIO) you would have lost horribly on many smaller ones – just as you would if you bet on an inflationary boom and bought cyclicals such as homebuilders.

My purpose here is not to disparage those who (unlike me) predicted a sharp rise in inflation. It is more significant than that. There is a big gap between macroeconomic forecasts and investment strategy. It is not enough to get the right macro calls to define the right investment strategy. And sometimes it’s not necessary either (which is just as well). It’s not just because you need to have good market timing – although you do. This is because the links between macroeconomic variables and asset returns are complex and not always predictable.

This does not mean, of course, that economists are useless. It was economists who discovered useful investing facts, such as the importance of stop-loss rules; the power of dynamic investing; the need to be wary of active management; and to guard against the countless errors of judgment to which investors are subject.

Macroeconomic forecasts are of little use, however, even on the rare occasions when they are accurate. So why do economists do it? It is because they are paid. Which itself justifies economics: people respond to incentives, sometimes in ways that are not socially useful.