Three-quarters of all U.S. stock mutual funds have failed to beat the market over the past decade. Last year, 98% of economists expected interest rates to rise; they fell instead. Most energy analysts didn’t foresee oil’s collapse from $145 a barrel in 2008 to $38 this summer — or its 15% rebound since.Humans are understandably eager to identify narratives (in their own lives, in market swings, in the universe, to name a few). To be sure, most people cheer whenever there is progress by scientists working the "Standard Model" of physics.
A new book suggests that amateurs might well be less-hapless forecasters than the experts — so long as they go about it the right way.
I think Philip Tetlock’s “Superforecasting: The Art and Science of Prediction,” co-written with the journalist Dan Gardner, is the most important book on decision making since Daniel Kahneman’s “Thinking, Fast and Slow.”
It's a little strange. Some forecasting ability is indispensable (it is generally safe to cross the street on a green light) but skepticism is also essential. Witness Zweig and Tetlock. Hard-to-find wisdom and perspective are essential. What else? Let us not-so-fast "go boldly where no man has gone before." Tetlock and Zweig seemingly say that we usually have no clue where it is that we are going.
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