Forecasts

Felix Salmon takes on market forecasting:

If you add together the fund managers and the economists and the TV pundits and everybody else telling you where the economy and the markets are going, you’ll get a number somewhere in the tens of thousands. The question isn’t whether one of them will turn out to be right, it’s just how many of them will turn out to have been right.

In fact, given the thousands of people in the market, it’s a statistical certainty that many of them won’t just be right once, but will be right time and time again. Such people are generally lauded as being fabulously smart and prescient, and lots of money gets thrown at them. As a general rule, it’s a good idea to make sure that money isn’t yours.

(Chart by Carl Richards.)

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