
‘Professional Prognosticators’
The smartest among us admit how little we know and, as a corollary, acknowledge that making predictions is mostly impossible outside of the hard sciences.
That latter bit isn't technically accurate. Making predictions is possible. Making accurate predictions isn't. Indeed, even predictions based on science are subject to missing the mark. Just ask a meteorologist.
Speaking of meteorologists, Wall Street's weathermen and women are still pretty confused, collectively anyway. The figure (below),
That’s good work by MS.
Do we prefer
– defensively favoring the names less likely to be affected by cost inflation? or
– offensively favoring the names that most benefit from cost inflation?
Gee, maybe corporations could make do with slightly lower margins and pay their employees a living wage. Maybe they could sacrifice some margin and use the money to reduce their carbon emissions. Gee, maybe they could even pay taxes. Nah.
H
As you rightly point out, it is not possible to make accurate point forecasts of the futrure in any arena of human or economic/financial behavior. However, the whole point of professional statistics is to tell one the likely size of the error in a forecast, something which will allow one to calculate the probable cost of making an error in the negative tail. Adjusting forecast techniques or business actions to minimize the error to the degree needed to keep that cost below the value of the possible benefit of a given strategy, especially in a long run context, is possible. The context is important because oil drillers, for example, can only get one of two outcomes for a given hole, either an attempt strikes a producible deposit or it doesn’t. The probability of each outcome doesn’t matter if you are only drilling one hole. However, with a forecast distribution of the probabilities for 1000 attempts, one can make a proper economic assessment of a given drilling program. Even hard scientists offer probabilities over predictions for a great many experiments. No one knows exactly how far away Antares is from earth, although we do have a reasonably good idea.
Kudos to you for referencing Jacob’s Ladder, saw it once in the theatre, still haunted. For kicks revisit 12 Monkeys, same era and very prescient given today’s world. Really appreciate your work.
I try to work in as many obscure references as possible just to see who catches them
I wasn’t aware of Jacob’s Ladder but definitely saw Angel Heart. I can’t agree with your recommendation. Yes, it’ll leave an unpleasant feel long after you’re done watching it but, man, that’s awesome!