Posts filed under “Philosophy”

Whats Your Forecast?

Its Philosophy Friday, and I want to discuss in broad terms the same interesting conversation that keeps coming up:

Over the past few weeks, I keep getting that question: Whats your forecast for the economy? Where will interest rates be at the end of the year? Are Jobs going to improve?

And of course, the big one: Are you bullish or bearish?

Most of the time, I give a two part answer that goes something like this:

1) I have no idea or real opinion on that, but here are some risk factors;


2) What I find more interesting than forecasts is trying to discern what consensus is, and then war-gaming what scenarios the Street is least prepared for. What outcomes cause the greatest disruption? What are the major portfolios least positioned to handle?

That often leads to an interesting discussion, and allows me to avoid saying what I really want to say, but often don’t. It goes something like this:

“Before anyone at this table gives us their NEW forecast, I must request, and indeed insist upon, in the spirit of full disclosure and objective accuracy, on the following 2 data points:

1. What was your forecast last year at this time on the same subjects?

2. What is your overall forecasting track record over the course of your career? Prior to the 2008-09 Crisis? Since then?

I have on occasion brought that up, and it causes a delightfully uncomfortable squirming, for all the right reasons.  (That’s the fast track to — heh heh — not get invited back to many dinners).

The thing I find most fascinating about the disclosure demand is what it does to the most confident (i.e., over-confident) forecasters. Humans, as I have pointed out many times, love a confident precise forecast over an accurate ambiguous one. Regardless of the obvious fact that most forecasts are bullshit, the track record disclosure does some lovely things.

A. It completely wilts the cocksuredness of most forecasters;

B. It provides a context for the forecast itself, namely, that they are mostly worthless;

C. It forces the participants to admit, both to themselves and others, that they actually have no idea what the future holds.

The next time you are in a group and some of the assembled people start making forecasts, ask the two track record questions above. Watch the stammering and rationalizing of the past performance, and the change in attitude. It is great fun!

Here’s my forecast: If you do this, you should not expect to get invited back many dinner parties in the future . . .







The Folly of Forecasting, (The, 06/07/05)

Worst Predictions for 2008 (December 31st, 2008)

Inside the Paradox of Forecasting (January 11th, 2011)

Forecasts Are Not Analysis; They are opinion (May 7th, 2013)

What’s your outlook on the markets and the economy?” (June 18th, 2013)

The Narrative Fails (Washington Post, July 19th, 2013)

Curse of the Narrative: Everybody Loves A Good Story (August 3rd, 2013)

Category: Apprenticed Investor, Philosophy, Really, really bad calls

W. Edwards Deming: 14 Points for Management

“Long-term commitment to new learning and new philosophy is required of any management that seeks transformation. The timid and the fainthearted, and the people that expect quick results, are doomed to disappointment.” -W. Edwards Deming Dr. Deming’s Ideas Dr. Deming’s famous 14 Points, originally presented in Out of the Crisis, serve as management guidelines. The…Read More

Category: Corporate Management, Philosophy

Outcome or Process Oriented?

Well, that was a busy week, wasn’t it? The non-Taper, the Lehman anniversary, oh, and our little launch has kept your humble author rather busy. Since its Friday, the day I like to get all philosophical on y’all, let’s reflect on a simple issue: What is more important to investors, their process or their results?…Read More

Category: Investing, Markets, Philosophy

Greatest Resignation Letter Ever

This was awesome: Dear Barton: You have a man in your employ that I have thought for a long time should be fired. I refer to Sherwood Anderson. He is a fellow of a good deal of ability, but for a long time I have been convinced that his heart is not in his work….Read More

Category: Employment, Philosophy

Loose Items

I am going to skip the my usual Friday Philosophy as this week has been enormously insane for me, out late for work every night, with lots of meetings every day (and tonight is another holiday). But I do have a few things I want to discuss/tease/show you: • There are still a few tickets left…Read More

Category: Markets, Philosophy

The Big Picture Conference: Scheduled Speakers

I am thrilled to tell you about the 5th Annual Big Picture Conference coming up on October 8th in New York City. We are extremely excited about the speakers, topics, even the venue itself. And, we are expecting our largest audience yet. I wanted to personally invite you as a reader of the Big Picture to what we…Read More

Category: Investing, Philosophy, Psychology

Simplify Your Future

Want more from your career and life? Live by this single sentence. Based on the free eBook of the same name: Simplify Your Future from Bruce Kasanoff by Bruce Kasanoff on Aug 01, 2013

Category: Digital Media, Philosophy, Think Tank

“I Am Looking to Outperform the Markets by 4-5% a Year”

Lately, the day job has been inspiring many of our Philosophy Phriday posts. (This coming Sunday’s WaPo column was also inspired by what we see int he office). Today’s post is another such example. Perhaps its because we run a somewhat different business model than is typical in the finance industry in the US. Our…Read More

Category: Apprenticed Investor, Hedge Funds, Investing, Philosophy, Psychology, Really, really bad calls

Umair Haque on the Global Economy

Umair Haque discusses the broken relationship between institutions and people, why the economy is stagnant, and how to fix it.

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Category: Philosophy, Video

How’s Your MetaCognition?

  “Knowing yourself is the beginning of all wisdom.” -Aristotle   Over the past few weeks, I have been waxing eloquent on the subject of self-awareness, knowledge, and recognizing one’s own lackings thereto. Last week, we discussed the Value of Not Knowing; that followed the prior week’s discussion of why I don’t bother guessing a…Read More

Category: Philosophy, Psychology