Hi Hank,
Thank you for your perspective and your extensive reference. The reference is overwhelming with detail that only a statistician would ever want to know.
Not all forecasts are equally formulated; not all forecasters are equally talented. Most forecasters have a dismal record when scored over time, but a few demonstrate a rare skill that exceeds a luck contributing factor.
We are very fortunate to have access to a dedicated researcher in this arena who documents his lifelong studies which are extensive in both time and manpower. That researcher is Philip Tetlock. His most recent book on the subject is titled “Superforecasting, the Art and Science of Prediction”.
The title broadly summarizes his fundamental conclusion: making a forecast includes elements that are both scientific and artful. His studies have generated much buzz and much controversy. He likes to classify forecasters into two groups: hedgehogs and foxes. The hedgehogs knowledge is deep in one specialized area; the foxes knowledge is more shallow and more diversified. Tetlock concludes that foxes are the better forecasters.
In repeated test periods, Tetlock has demonstrated small enhancements in prediction capability. For example, he has selected superior forecasters from earlier experiments and has formed them into teams. The teams show prediction improvements, perhaps because of the team interchanges. The improvements seem small, maybe just noise.
In his book’s closing statement, Tetlock says that “To be sure, in the big scheme of things, human foresight is puny, but it is nothing to sniff at when you live on the puny human scale”. That bit of philosophy aside, the documented improvements seem marginal, and yes even puny.
But some guys have proven to be better predictors than the generic crowd, just like Ted Williams was a superior baseball hitter and a two war ace fighter pilot. The reasons why are not so clear. Regardless of the forecasting skill set, we are typically more comfortable making or seeking forecasts. Perhaps in so dong we feel like we’re more in control.
The referenced Tetlock book may well exceed your interest and/or commitment time level, so here is a Link to a good review of that book:
http://www.economist.com/news/books-and-arts/21666098-forecasting-talent-luckily-it-can-be-learned-unclouded-visionOnce again, I see it much like Junkster does. Investing is part science and part art. The dominant part is art. There are many approaches to successful investing, each with their own advantages and pitfalls. It’s a good practice to be comfortable with your chosen method since there will surely be periodic ups and downs. An important element is to have “true grit” to persevere and remain committed through the turbulent turmoil.
Thanks again for your valuable participation.
Best Wishes.
