Posts filed under “Sports”
We’re down to the Final Four in this year’s iteration of March Madness, also known as the national collegiate basketball tournament. Our earlier discussion of “The March Madness Theory of Investing“ didn’t sit well with some readers. The lessons we sussed out from the bracket-destroying results included home-country bias, how expert forecasts are about as good as those of nonexperts, and the impact of noise and distraction.
One issue I want to delve into further is why predicting the future seems to be so hard, if not impossible. That particular “lesson” caused quite a bit of pushback.
(P)redicting the future is actually pretty easy in a macro sense. For instance, anyone with a sound understanding of macroeconomics and the capital structure knows, with a very high probability, that stocks will tend to become more valuable over long periods of time because stocks reflect the value of some portion of our overall output.
I don’t see this so much as a factual disagreement as simply defining epistemological elements differently.
At the risk of repeating myself, let’s define just what a prediction is:
Continues here: March Madness and the Perils of Predicting
Last week, I was in Seattle for an event sponsored by the CFA Institute. The trip was booked long before any of us knew the Seahawks were going to defend their championship title in Super Bowl XLIX. Following the Seahawks’ amazing comeback in the NFC Championship versus the Green Bay Packers on Jan. 18, the city…Read More
“All models are wrong; some are useful.” – George E. P. Box The quote above comes from George Box. He was a brilliant statistician and professor, who thought long and hard about the use and misuse of statistics. I was reminded of Box this weekend while watching the thrilling World Cup final between…Read More
Cool interactive graphic: Click for an interactive Source: Businessweek