Sunday, June 9, 2013

Predicting the future, and Hindsight mirrors

Predicting the future is an impossible task, a fools errand, full of pitfalls. Still we listen and soak in all that is said, we even spend a tremendous amount of money to gain an edge in knowing what maybe just around the corner. Looking back over the last ten years I suspect things have not unfolded as you might have predicted. When you see how the world has developed, the twist and turns are most unpredictable. Nowhere is this more apparent then in the economy, whether it is in the areas of interest rates and inflation or the rise and fall of companies. Surprise and awe, highlighted with bouts of shock is what we should expect going forward.

The fact is you can not be sure if you will still be around in ten years, where you will be living, or with whom. A television commercial recently talked about a hindsight mirror, unfortunately they said the mirror had been recalled as they were not providing a clear reflection as advertized, when looking into the mirror people were disappointed that they did not see 20-20 as promised. They also mentioned that they had problems with the foresight goggles, it seems they have been discontinued because they tend to fog up, thus unable  to provide a clear picture of the future.

Even when you think back to a time when the signs should of been obvious, now with the help of hindsight we often find that the light simply did not come on. It seems we should not underestimate our ability to stagger forward oblivious of reality and blind to what lies ahead regardless of our effort to shed light on future events. It seems we can not even trust our ability to recall past event without distorting them or coloring them with bias. Economist still debate if it was the economic policies of Roosevelt or the second World War that lead us out of the great depression.

Then comes the issue of "Black Swans", this term is used to describe events that seem to descend out of nowhere, author Nassim Taleb has brought insight to this area and to the idea of "antifragile" systems, a term he uses to look at many of the modern systems developed by man. Mother nature can be the one that delivers these surprises, think of the 2011 hit on Japan in the form of a tsunami that became a nuclear plant meltdown. This is proof that complex systems can often contain flaws that go undetected or are not addressed.

In his recent book, Taleb uses the example of how a turkey is fed day after day by a butcher, and how this confirms his love for the bird. When Thanksgiving arrives the turkeys are not only surprised, they are shocked by events as they unfold. Taleb clearly makes the point that we can not use the recent past and day to day events of yesterday  as a way to predict the future. At the same time it is not always reliable  to use statistics that are often invalid and skewed to make certain points. It was recently pointed out that Bill Gates and I have an average net worth of about $20 billion, I only wish as larger portion was mine. Telling me about “average” stock market returns is about as valid and relevant as this reference to wealth. 

I wish I was smarter, and better. Many of us would settle for someone very wise that we trusted and that cared about us to guide us through the mine fields of life, but reality is, each of us is more or less on our own. Believe it or not, some people even disguise and cloak themselves as our friends as they navigate through life with hidden agendas that advance their position or cause at our expense. Thus, I have reached the conclusion that "I would rather be lucky then good", this has been reinforced by all I have observed. Be assured we cannot trust the garbage spewed out from the media or what we read on the internet. The only exception is what you read on my post, I'm not lying, at least not this time. 

Footnote; This post dovetails with two others about believing those talking heads on the media, the link are below. Other related articles may be found in my blog archive, thanks for reading, your comments are encouraged.


1 comment:

  1. The 25 Year Rule states that 25 years after some kid buys a new toy, (or whatever plaything interests him or her)that toy/plaything will become collectible due to the now grown up kid's buying power plus his/her nostalgia for it.