Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
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Larry Swedroe: Ignore Forecasts—They're Usually Wrong
If you area follower or are thinking about following Porter Stansbury you ought to read the Swedroe post. Alternatively if you are not a follower and do not plan to be you can save time and money and don't change your plans
I certainly agree that forecasting is hazardous duty and is often wrong. But not always. It's one of those instances when you're damned if you do and damned if you don't. The fact is that we all make forecasts everyday in every way, often without giving it a second thought. In earlier posts I was overly simplistic when I stated that forecasters can not forecast.
Phil Tetlock has studied and carefully conducted forecasting projects for decades. He believes it is an art form, but with practice it can be improved. His book titled ".Superforecasting" documents his and others work in this field.
Here is a list of characteristics that he recommends to enhance forecasting outcomes that are based on his voluminous field work. Here are the resultant Superforecasters traits:
Cautious Humble Nondeterministic Actively open-minded Intelligent and knowledgeable with a need-for-cognition Reflective, introspective and self-critical Numerate Pragmatic (vs Big Idea) Analytical (capably of seeing multiple perspectives) Dragonfly-eyed (value multiple perspectives) So important they bullet-pointer it twice! Probabilistic Thoughtful updaters Good intuitive psychologists (aware of and able to compensate for common biases) Growth mindset Grit
I'm sure we all have some of these traits. With practice we can enhance them. We're back to that old saw that our coaches preached: practice makes perfect, but in this instance it improves the odds for a successful forecast. According to Tetlock, keeping score is important in that process. A little luck helps too as well as persistence. Always use any existing base rate as a point of departure.
It's interesting that you refer to a coin flip as an example. We often suggest the flip as a 50/50 outcome game. That's yet another example of an oversimplification. We don't know as much as we think we know.
While the coin toss outcome might be a theoretical even likelihood, practical physics considerations shift those even odds. If you flip a coin, the probability is 51% that the coin with the side up on the flip will land that same way. When you spin a coin, the likelihood of a tail outcome is well in excess of .50%. Test data supports these outcome odds.
We learn something every day. Here is a reference to some testing conducted by a physics professor:
You are always free to express an opinion. I disagree with your assertion with regard to the statement that you pulled from my post. And it was a minor inconsequential part of the submittal. My primary thrust was to recognize the progress being made in the forecasting discipline. And additionally you might make some money by knowing the odds of the coin flip and spin. I post to help the folks on MFO.
The fatuity of assuming a symmetric coin is not practical in the real world. The Superforecasters warn against assumptions. It produces faulty forecasts.
What has been your positive contribution to this topic?
I am glad to have your permission to query you about what something you wrote means, such as the completely empty (think about it) opening statement that forecasting is often wrong but not always. Yet now you say it has progressed. So which is it, in one simple savvy sentence? I don't know that querying you is less positively contributory than your long sets of thoughts, but I do sense that 'bad attitude' may be anyone who reads your posts and reacts 'Wait, what? That ain't so.'
Coin flip has always assumed symmetry --- that's what it means, and why it is used as it is. Also why there are interesting articles about the opposite in the real world, when discovered.
So you persist in being critical of my opening statement “….forecasting is hazardous duty and is often wrong. But not always.” I consider it a rather innocuous introduction. Yes, it is redundant. But I constructed it to attract a potential MFO reader’s attention. Call it my writing style or a gimmick. Who cares?
The purpose of my submittal was to bring Phil Tetlock’s research on forecasting front-and-center. His research has identified ways to improve the forecasting art. Since we all forecast daily, the submittal could be useful to many MFOers. What was the purpose and the usefulness of your picayune comment?
Yes, picayune! Do you believe your comments helped any MFOer? I doubt it. Since I don’t fact check every comment I submit, I do make errors. I welcome and truly appreciate corrections to those errors. I also welcome and truly appreciate any submittals that advance the subject, either supporting it or opposing it. That is the learning process.
Instead, you waste my time and other MFOers with a worthless observation. Picayune, picayune, picayune. Those last statements are made for emphasis.
I have made my point. I’m still puzzled over your point and purpose other than to be a disruptive presence. By your selective commentary you also tend to distort the posting. For example, you said: “I am glad to have your permission….”. I never challenged your option to comment. It’s what you said, or didn’t say, that I did challenge.
EDIT: I never granted nor did I withhold "permission" to post. That is not in my character, and is far above my pay grade. I don't possess that dictatorial power and I surely do not want it.
@MJG: What exactly do you call that if not granting permission? Does it strike you at all that some of us resent your constant talking down to us? You seem to specialize in pomposity.
(LATimes) \\ Although Rodney King was driving under the influence and was on parole for armed robbery, he was never charged. He was awarded $3.8 million in compensation by the city. King, 47, spent his multimillion-dollar award. He had frequent runins with police for domestic violence, substance abuse, and driving under the influence. He appeared on Vh1’s "Celebrity Rehab," tackling his alcoholism, and just published a book, "The Riot Within, My Journey from Rebellion to Redemption." He was found dead in the swimming pool at his Rialto home on Sunday, June 17, 2012.
If only he had come to MFO and listened to all of us wise ones and invested ....
You are always free to interpret my posts in whatever way you choose.
It is never my intent to talk anyone down. I don't comment on specific fund choices or portfolio asset allocations. I hesitate to offer any recommendations because I understand my limitations, the sagacity of the MFO population, and the uncertainties of any financial forecasts. I expect and respect a diversity of investment decisions from individual investors.
A large majority of my posts, perhaps a fraction approaching 100%, provide Links to investment tools and research findings. My only purpose is to expose MFOers to tool sets and careful studies that just might improve their investment decisions. All MFOers are free to use or reject my references. I anticipate a mixed reaction.
I have never claimed to be an investment professional; I retain my amateur status. I learn from the references that I submit. Since I'm in a constant learning mode, I try to keep an open mind. It is certainly true that when I reach some tentative conclusion, I report in a manner that reflects my assessment. I suspect most MFOers do the same.
Note that I said my conclusions are tentative. I try to keep an open-mind and am humble. I make plenty of mistakes and freely admit it. I do emphasize statistical analyses and perhaps that makes a few folks uncomfortable. That need not be the case. Sorry, but that's beyond my control.
@MJG Informing someone who uses a coin flip as a metaphor for chance that it's not exactly 50/50, and linking to a physics professor's article on the subject, with an added comment that "you might profit from these insights" is pretty close to a dictionary defintion of condescension.
That said, I think you're a wise, experienced investor who shares valuable insights with us. I hope you continue to do so. I see that you spend time and effort on your contributions. I appreciate and learn from them, and I know I'm not the only one.
Let's all take you at your word that your condescension was unintentional. That happens easily, especially on the internet.
Thank you for your very kind words. I greatly appreciate them and your words of encouragement. I will continue the march.
Thank you also for the cautionary heads-up with respect to writing in a condescension manner. I was simply trying hard to be informative. I suppose I can try too hard.
My reference to the 50/50 coin toss was an attempt (failed)to be sarcastic. I am irritated by negative posts that take issue with some peripheral comment or even a single word to detract from the primary purpose of the post. So I sarcastically introduced my negative 50/50 coin toss reference to demonstrate the trivial nature of such a useless comment. These do not advance the discussion whatsoever.
I have often posted using the 50/50 illustration myself knowing that it is not 100% precise. The fact that it does not hold exactly has been known for decades, at least for the spinning version of it. It appears in many books on probability although various authors claim differing odds.
I suspect that much of the antipathy directed at my posts is prompted by my frequent references to statistics and Monte Carlo analyses. Some folks are intimidated by these references. They should not be since these tools are easily accessible on the Internet and can be used to better investment decisions. You need not be a mechanic to drive a car.
Comments
I certainly agree that forecasting is hazardous duty and is often wrong. But not always. It's one of those instances when you're damned if you do and damned if you don't. The fact is that we all make forecasts everyday in every way, often without giving it a second thought. In earlier posts I was overly simplistic when I stated that forecasters can not forecast.
Phil Tetlock has studied and carefully conducted forecasting projects for decades. He believes it is an art form, but with practice it can be improved. His book titled ".Superforecasting" documents his and others work in this field.
Here is a list of characteristics that he recommends to enhance forecasting outcomes that are based on his voluminous field work. Here are the resultant Superforecasters traits:
Cautious
Humble
Nondeterministic
Actively open-minded
Intelligent and knowledgeable with a need-for-cognition
Reflective, introspective and self-critical
Numerate
Pragmatic (vs Big Idea)
Analytical (capably of seeing multiple perspectives)
Dragonfly-eyed (value multiple perspectives) So important they bullet-pointer it twice!
Probabilistic
Thoughtful updaters
Good intuitive psychologists (aware of and able to compensate for common biases)
Growth mindset
Grit
I'm sure we all have some of these traits. With practice we can enhance them. We're back to that old saw that our coaches preached: practice makes perfect, but in this instance it improves the odds for a successful forecast. According to Tetlock, keeping score is important in that process. A little luck helps too as well as persistence. Always use any existing base rate as a point of departure.
Best Regards.
hence perhaps not different from all such speculative behaviors ... "expectantly flipping coins is often wrong, but not always."
It's interesting that you refer to a coin flip as an example. We often suggest the flip as a 50/50 outcome game. That's yet another example of an oversimplification. We don't know as much as we think we know.
While the coin toss outcome might be a theoretical even likelihood, practical physics considerations shift those even odds. If you flip a coin, the probability is 51% that the coin with the side up on the flip will land that same way. When you spin a coin, the likelihood of a tail outcome is well in excess of .50%. Test data supports these outcome odds.
We learn something every day. Here is a reference to some testing conducted by a physics professor:
http://www.smithsonianmag.com/science-nature/gamblers-take-note-the-odds-in-a-coin-flip-arent-quite-5050-145465423/
Enjoy. You also might profit from these insights. Good luck!
Best Wishes.
the point was the fatuity of
>> forecasting is hazardous duty and is often wrong. But not always.
You are always free to express an opinion. I disagree with your assertion with regard to the statement that you pulled from my post. And it was a minor inconsequential part of the submittal. My primary thrust was to recognize the progress being made in the forecasting discipline. And additionally you might make some money by knowing the odds of the coin flip and spin. I post to help the folks on MFO.
The fatuity of assuming a symmetric coin is not practical in the real world. The Superforecasters warn against assumptions. It produces faulty forecasts.
What has been your positive contribution to this topic?
Best Wishes irrespective of a bad attitude.
Coin flip has always assumed symmetry --- that's what it means, and why it is used as it is. Also why there are interesting articles about the opposite in the real world, when discovered.
So you persist in being critical of my opening statement “….forecasting is hazardous duty and is often wrong. But not always.” I consider it a rather innocuous introduction. Yes, it is redundant. But I constructed it to attract a potential MFO reader’s attention. Call it my writing style or a gimmick. Who cares?
The purpose of my submittal was to bring Phil Tetlock’s research on forecasting front-and-center. His research has identified ways to improve the forecasting art. Since we all forecast daily, the submittal could be useful to many MFOers. What was the purpose and the usefulness of your picayune comment?
Yes, picayune! Do you believe your comments helped any MFOer? I doubt it. Since I don’t fact check every comment I submit, I do make errors. I welcome and truly appreciate corrections to those errors. I also welcome and truly appreciate any submittals that advance the subject, either supporting it or opposing it. That is the learning process.
Instead, you waste my time and other MFOers with a worthless observation. Picayune, picayune, picayune. Those last statements are made for emphasis.
I have made my point. I’m still puzzled over your point and purpose other than to be a disruptive presence. By your selective commentary you also tend to distort the posting. For example, you said: “I am glad to have your permission….”. I never challenged your option to comment. It’s what you said, or didn’t say, that I did challenge.
EDIT: I never granted nor did I withhold "permission" to post. That is not in my character, and is far above my pay grade. I don't possess that dictatorial power and I surely do not want it.
Best Wishes.
@MJG: What exactly do you call that if not granting permission? Does it strike you at all that some of us resent your constant talking down to us? You seem to specialize in pomposity.
\\ Although Rodney King was driving under the influence and was on parole for armed robbery, he was never charged. He was awarded $3.8 million in compensation by the city. King, 47, spent his multimillion-dollar award. He had frequent runins with police for domestic violence, substance abuse, and driving under the influence. He appeared on Vh1’s "Celebrity Rehab," tackling his alcoholism, and just published a book, "The Riot Within, My Journey from Rebellion to Redemption." He was found dead in the swimming pool at his Rialto home on Sunday, June 17, 2012.
If only he had come to MFO and listened to all of us wise ones and invested ....
You are always free to interpret my posts in whatever way you choose.
It is never my intent to talk anyone down. I don't comment on specific fund choices or portfolio asset allocations. I hesitate to offer any recommendations because I understand my limitations, the sagacity of the MFO population, and the uncertainties of any financial forecasts. I expect and respect a diversity of investment decisions from individual investors.
A large majority of my posts, perhaps a fraction approaching 100%, provide Links to investment tools and research findings. My only purpose is to expose MFOers to tool sets and careful studies that just might improve their investment decisions. All MFOers are free to use or reject my references. I anticipate a mixed reaction.
I have never claimed to be an investment professional; I retain my amateur status. I learn from the references that I submit. Since I'm in a constant learning mode, I try to keep an open mind. It is certainly true that when I reach some tentative conclusion, I report in a manner that reflects my assessment. I suspect most MFOers do the same.
Note that I said my conclusions are tentative. I try to keep an open-mind and am humble. I make plenty of mistakes and freely admit it. I do emphasize statistical analyses and perhaps that makes a few folks uncomfortable. That need not be the case. Sorry, but that's beyond my control.
Best Wishes.
>> My only purpose is to expose MFOers to tool sets and careful studies
oh, come on, you are a born parent.
That said, I think you're a wise, experienced investor who shares valuable insights with us. I hope you continue to do so. I see that you spend time and effort on your contributions. I appreciate and learn from them, and I know I'm not the only one.
Let's all take you at your word that your condescension was unintentional. That happens easily, especially on the internet.
Thank you for your very kind words. I greatly appreciate them and your words of encouragement. I will continue the march.
Thank you also for the cautionary heads-up with respect to writing in a condescension manner. I was simply trying hard to be informative. I suppose I can try too hard.
My reference to the 50/50 coin toss was an attempt (failed)to be sarcastic. I am irritated by negative posts that take issue with some peripheral comment or even a single word to detract from the primary purpose of the post. So I sarcastically introduced my negative 50/50 coin toss reference to demonstrate the trivial nature of such a useless comment. These do not advance the discussion whatsoever.
I have often posted using the 50/50 illustration myself knowing that it is not 100% precise. The fact that it does not hold exactly has been known for decades, at least for the spinning version of it. It appears in many books on probability although various authors claim differing odds.
I suspect that much of the antipathy directed at my posts is prompted by my frequent references to statistics and Monte Carlo analyses. Some folks are intimidated by these references. They should not be since these tools are easily accessible on the Internet and can be used to better investment decisions. You need not be a mechanic to drive a car.
Thank you once again.
My Very Best Wishes.