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2019 Forecasts Michel Pireu     | Business Day Thursday, December 20, 2018
2019 Forecasts: Predictions Will Be Wrong, Random or Worse. Every year, the prognosticators come out of hiding. You have to wonder why they bother, given their record. – Bloomberg

‘Tis the season, when strategists and analysts (metaphorically speaking) sharpen their pencils to jot down their most heartfelt predictions for the coming year. Full of bravado and confidence, they explain what stocks to buy, whether a recession will come along, what the Fed is going to do, and when the market is going to crash. (Although that last one is less of a prediction these days and more of a case of real time reporting.) These are, for the most part, exercises in futility. All analysts belong to a species which has repeatedly shown itself to be terrible at predicting very much beyond what they might like to eat for lunch today. This is not an opinion, it is a statement of fact … The problem with forecasts goes beyond their mere lack of accuracy. My critique is with the underlying cognitive and philosophical failings that are associated with the entire forecasting industry: a lack of humility, the assumption of a skill set clearly not in evidence, and most damning of all, a failure to recognize the randomness of the world at large. These are all related to the Overconfidence Bias so common in investing, combined with the Dunning-Kruger effect … I find it helpful to break forecasts into distinct archetypes: good faith guesses, foolish predictions, and marketing bullshit. – Barry Ritholtz.

There's simply no way around the limited ceiling of our own mind. It's flat-out impossible to speculate on the future without (a) consciously focusing on the most obvious aspects of what we already know and (b) unconsciously excluding all the things we don't have the intellectual potential to grasp. ― Chuck Klosterman
 
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