Predictions are hard................

 

This data is fairly well known. The problem, though, is that trading activity generates revenue for the brokerage industry, so it has an interest in keeping investors engaged with the market. That’s why brokerage analysts are on TV every day, offering their forecasts for individual stocks, for the overall market and for the broader economy. To be sure, this makes for interesting television. The problem, though, is that it’s been shown to carry almost no value. According to research by Joachim Klement, the accuracy of Wall Street prognosticators is approximately zero.

-Adam Grossman, from here

the quest for certainty............

 

     Professor Philip Tetlock has spent most of his career studying experts, self-proclaimed or otherwise.  A big takeaway from his research is how awful so many experts are at predicting politics and the economy.  Given that track record, will people ever choose to ignore the experts?  "No way," Tetlock once said.  "We need to believe we live in a predictable, controllable world, so we turn to authoritative-sounding people, who promise to satisfy that need."

     The inability to forecast the past has not impact on our desire to forecast the future.  Certainty is so valuable that we'll never give up the quest for it, and most people couldn't get out of bed in the morning if they were honest about how uncertain the future is.

-Morgan Housel, Same as Ever: A Guide to What Never Changes

Foggy...................

 

Forecasting the length and severity of war always seems easier with the benefit of hindsight, just like it is with markets.

-Ben Carlson, from this post

Emergence....................

 

The pattern is remarkably consistent. We either wildly overestimate the short-term impact of new technologies (remember when blockchain was going to replace every institution within five years?) or we catastrophically underestimate their long-term consequences. Nobody building the early internet imagined it would reshape elections, create trillion-dollar companies, or leave millions of people psychologically dependent on dopamine hits from their phones.

It isn’t just that we fail to predict which technologies will emerge; we fail spectacularly at predicting the second- and third-order effects of the technologies we already have. Social media was supposed to connect the world. It did. It also polarised it. The smartphone was a communication device. It became an anxiety machine for an entire generation of teenagers. Nobody planned these outcomes. They emerged.

-Nicholas Bate, from here

pondering the future.......

 

Albert Robida         The Release of the Opera in the Year 2000       c. 1882, lithograph

Their every day will be caught in the wheels of mechanized society, to the point where I wonder how they will find the time to enjoy the most simple pleasures we had at our disposal: silence, calm, solitude.  Having never known them, they shall not be able to miss them.  As for me, I do—and I pity them.

-Albert Robida, from his short story "1965," written in 1920

A conversation between...................

 

............John Mayard Keynes and Swiss banker Felix Somary (according to Somary) in April of 1928:

Keynes asked me what I was advising clients.  'To insulate themselves as much as possible from the coming crisis, and to avoid the markets,' I replied.

Keynes took the opposite view.  'We will not have any more crashes in our time', he insisted, and asked me in detail for my opinions about individual companies.

'I think the market is very appealing and prices are low,' said Keynes.  'And where is the crash coming from in any case?'

'The crash will come from the gap between appearances and reality.  I have never seen such stormy weather gathering,' I said.

-Edward Chancellor, The Price of Time: The Real Story of Interest

2025 was exciting and interesting, but..............

 

................2026 is a verification year, not a promise year.

Crystal ball time........................

 

Bull markets can last longer than you think but we can’t have above-average returns forever.

Therein lies the biggest risk in 2026…or 2027 or 2028 or some undetermined year in the future.

Eventually, above-average returns lead to below-average returns. Sometimes the biggest reason for bad returns is because good returns lasted for so long.

Predictions are hard.

tough job.................

 

One secret to being a successful prognosticator? Never mention a number and a date in the same sentence.

-Spencer Jakab

got that right.......................

 

     The war against terrorism is not, strictly speaking, a war against nations, even though it has already involved international war in Afghanistan and presidential threats against other nations.  This is a war against "the embittered few"—"thousands of trained terrorists"—who are "at large" among many thousands, and even millions of others who are, in the language of this document, "innocents," and thus deserving of our protection.

     Hunting these terrorists down will be like combing lice out of a head of hair.  Unless we are willing to kill innocents in order to kill the guilty—unless we are willing to blow our neighbor's head off, or blow our own head off, to get rid of the lice—the need to be lethal will be impeded constantly by the need to be careful.  Because of the inherent difficulties and because we must suppose a new supply of villains to be always in the making, we can expect the war on terrorism to be more or less endless, endlessly costly and endlessly supportive of a thriving bureaucracy.

-Wendell Berry, Citizenship Papers, 2003, containing the essay, A Citizen's Response

About perfect............................

 

My crystal ball is a bit cloudy...........

 

We’ll get another recession someday. Maybe in a year. Maybe in 7 years. Who knows?

Whenever an economic contraction occurs, we’re likely to see lower rates. These things aren’t scientific but mortgage rates have fallen by an average of around 1-2% during past recessions.

If that happens this time around I think you’re going to see an explosion of housing activity from pent-up supply and demand that has been sitting on the sidelines. We could also see a big uptick in cash-out refis and HELOCs if rates are at more reasonable levels because so much equity is tied up in homes these days.

People would be very confused by this but the housing market already went through a recession so it wouldn’t surprise me to see it lead us out of the next one.

-Ben Carlson, as cut-and-pasted from here

an equation.........................

 

Einstein wrote an equation that says that R is equivalent to the energy of matter.  That is to say: space curves where there is matter.  That is it.  The equation fits into half a line, and there is nothing more.  A vision—that space curves—became an equation.

     But within this equation there is a teeming universe.  And here the magical richness of the theory opens up into a phantasmagorical succession of predictions that resemble the delirious ravings of a madman but all have turned out to be true.

-Carlo Rovelli, Seven Brief Lessons on Physics

"Cautious".............................

 

     Franklin, however, was no Malthusian pessimist.  He believed that, at least in America, increased productivity would keep ahead of population growth, thus making everyone better off as the country grew.  In fact, he predicted (also correctly) that what would restrain American population growth in the future was likely to be wealth rather than poverty, because richer people tended to be more "cautious" about getting married and having children.

-Walter Isaacson, Benjamin Franklin, An American Life

forecasts........................

 

I come not to praise forecasters, but to bury them. . . .

    There is a forecasting-industrial complex, and it is a blight on all that is good and true.  The symbiotic relationship between the media and Wall Street drives a relentless parade of money-losing tomfoolery: Television and radio have 24 hours a day they must fill, and they do so mostly with empty nonsense.  Print has column inches to put out.  Online media may be the worst of all, with an infinite maw that needs to be consistently filled with new and often meaningless content.

     Just because the beast must be fed, does not mean you must be dragon fodder.

-Barry Ritholtz, How Not to Invest

On the wrong side of history...................

 

...........................or, predictions are hard.

One more thing he got right......................

 

The failure of Western governments to achieve their proclaimed objectives has produced a widespread reaction against big government. . . . The reaction may prove short-lived and be followed, after a brief interval, by a resumption of the trend toward ever bigger government.  The widespread enthusiasm for reducing government taxes and other impositions is not matched by a comparable enthusiasm for eliminating government programs—except programs that benefit other people.

-Milton & Rose Friedman, Free To Choose

Figuring out the future..................................

 

.................................is difficult at best.

A fact.............................

 

............................................multiplied by a story.

written in 1970.....................

 The illiterate of the 21st century will not be those who cannot read and write, but those who cannot learn, unlearn, and relearn.

-Alvin Toffler