It's another New Year. Most experts are expecting a modest improvement in future economic conditions and consulting advisors to act accordingly.

The Federal Reserve is forecasting 3% to 3.6% growth this year, Donald Jay Korn reports in our "Outlook 2011" cover story (page 56). Stocks, after a couple of strong years, are expected to continue to make gains. Inflation is supposed to remain in check. And any concerns about a double-dip recession have dissipated. "Hopefully this year's results will skew more toward boom than gloom," he writes.

But as we know, the future is a funny thing: It never turns out the way you think it will. Most of the time, well-educated, well-intentioned people make assumptions that, because of any number of factors, prove false.

Korn writes in "True Value," that if you look over the last "Decade of Disappointment," value funds, on average, outperformed growth funds (page 83). The results, he says, "may seem a bit surprising, especially considering that the most recent-and steepest-market slide, from the fall of 2008 to the winter of early 2009, included a debacle for financial companies, the darling of value funds."

If financial funds flopped so spectacularly, how did value funds post superior numbers for the trailing 10 years? The short answer: "[T]hey held few technology stocks and emerged from the bursting tech bubble with a lead they held thoughout the decade," according to Michael Breen, associate director of mutual fund analysis at Morningstar.

Another assumption: Temma Ehrenfeld notes in "Pricing Risk," that while it might appear investing in the stock markets of growing countries might see the best results, the opposite turns out to be true (page 21). Between 1971 and 2008, the developed countries in the MSCI's indexes whose economies were growing, after inflation, produced stock returns six basis points lower than those countries where the economy shrunk.

And Craig L. Israelsen points out in "Measuring Stick" that nailing down expected returns on an investment can be surprisingly complex (page 79). Assumptions are made about tax rates, inflation and reinvestments that don't completely simulate the reality of investing.

"For instance," he writes, "very few people make a single lump-sum investment. On the contrary, those who have 401(k) retirement plans through their employers invest on a regular basis. The fact that most investors contribute via an annuity pattern create an immediate disconnect with the lump-sum figures supplied to investors to help them gauge the success of their investments." What happens is that the return one might expect can be significantly different depending on when a contribution is made.

Indeed, making assumptions can be costly-unless, of course, your assumption is to have a good backup plan.

Happy New Year!-John McCormick, editorial director