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March 02, 2009

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jb

There's a great blog called overcoming bias (www.overcomingbias.com) that talks about the absurd concept of predicting things without a track record, and the general "caveman-level" belief in the predictive ability of "great men". This is a legacy of our primitive past, where wise medicine men represented the learned knowledge of the tribe.

The only predictions one can trust are ones with dollars attached. Prediction markets, as it were. At the end of the day, you and I and everyone should be willing to put our money where our mouths are if we are to be decent prognosticators. Because without accountability, there's no reason to trust anyone's predictions.

Also, as far as I can tell, no one has a good track record - Roubini and Taleb both got this one thing right, but it does not in any way make them more likely to get the next thing right.

Lastly, consider using rough percentages in your predictions - "I think it's 70% likely we'll be at 6000 by June, but we could go to 8000 (25%) and there's a 5% chance we'll go to 5000 or lower"

That kind of spread gives us some sense of the different possibilities, which is far more information than "We're going to 6000 by June".

jb

Oh, I want to applaud you on your honesty in this difficult time. I'm sure it's not easy to admit that you're not as smart as you thought you were, and that no one else is as smart as you thought they were.

The only thing I'm smart enough to know is that I'm not smart enough to be making predictions :)


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I'm sure it's not easy to admit that you're not as smart as you thought you were, and that no one else is as smart as you thought they were.

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