Tuesday, February 13, 2007

PREDICTIONS ARE EASY WITH NO ACCOUNTABILITY

We read all kinds of articles making bold predictions and offering up the consensus view and conventional wisdom. Rarely do we see revisit those predictions and wisdom to assess how good our forecasting is. This ESPN article looks back at how wrong the preseason NFL punditry was, as well as a range of non-football prognostications.
Then there was the incredible ESPN.com meta-forecast. Twelve fulltime pro football pundits predicted the Super Bowl outcome. Their forecasts: Colts over Panthers (predicted six times), Panthers over Colts, Colts over Seahawks, Seahawks over Colts, Panthers over Patriots, Seahawks over Broncos, and Bengals over Cowboys.
Twelve tries, all wrong! No ESPN expert forecast the Bears to make the Super Bowl, while 10 of ESPN.com's 24 projected Super Bowl entrants failed to make the playoffs. Also from the meta-forecast: Michael Smith had Michael Vick as MVP, Mike Golic had Bill Parcells as Coach of the Year and Merrill Hoge had Nick Saban as Coach of the Year.

My own preseason pick, if I remember correctly, was Colts over Seahawks. Prior to the playoffs, I had Colts over Bears by 10 in the Super Bowl. I picked all but two playoff game winners correctly with the exception of SD over NE and Eagles over Saints (with the qualification that I thought Philly would lose but I wanted to root for them). Not bad overall. Heading into baseball season, I always take the under on "Pirates number of wins, season" as well as "Pirates number of wins vs. Astros" and "Pirates number of wins vs. Cards." Nothing is surer. (Which I shouldn't say, since one o' yins will take the three minutes to prove me wrong.)

Rethink your investment strategy for 2007:
The very first Wall Street Journal edition of 2006 had as its lead story an article predicting a bad year for stocks. "Expect below-average returns again in 2006," was the banner quotation, from Jeffrey Kleintop, chief investment strategist at PNC Advisors. During 2006 the Dow Jones Index rose 16 percent. The final Wall Street Journal edition of 2006 featured a wrap-up proclaiming "a blockbuster year" for stocks. The first Wall Street Journal of 2006 also contained a table in which 33 high-profile Wall Street, hedge fund and corporate economists -- people who draw spectacular salaries for making economic forecasts -- predicted the coming 12 months. Their consensus was that 2006 would end with unemployment at 4.9 percent, the federal funds rate at 4.75 percent, the Euro at $1.20 and the Dow Jones "somewhere between 11000 and 11999." The year ended with unemployment at 4.5 percent, the federal funds rate at 5.25 percent, the Euro at $1.31 and the Dow Jones at 12463. Note: Considering the Wall Street Journal predicted 2006 would be a bad year for the stock market, I find it unsettling that in the first edition of this year, the same newspaper predicted 2007 will be a good year for the stock market.

Who could have predicted (especially at Newsweek!) that the average marrying age would increase significantly over the next generation or that the thought of being killed by a terrorist would become much less remote.
In June 1986, Newsweek ran its infamous "Marriage Crunch" cover story, which pronounced that a college-educated career woman of age 30 had only a one-in-five chance of winning a husband, while an educated professional woman of age 40 had essentially no chance. At a time when this must have sounded funny to someone at Newsweek, the magazine declared that a single 40-year-old career woman was "more likely to be killed by a terrorist" than to find a man who would say "I do." Twenty years later in June 2006, Jeffrey Zaslow of the Wall Street Journal checked to see how these predictions stood the test of time. Women aged 30 to 40 in 1986 when Newsweek declared them unmarriageable are aged 50 to 60 now, Zaslow reasoned. Crunching Census Bureau stats, he found that 90 percent of college-educated American women between the ages of 50 to 60 have married at least once. Zaslow tracked down the 10 career-shark single women who were named in the 1986 Newsweek cover story as certain spinsters: eight later married.

2 comments:

Sir Saunders said...

How true, how true! It is the "prophet of doom" syndrome. The worse the perdiction, the more likely it is be forgotten/forgiven if it doesn't come true. The polyanna though, will unfortunately get his ass whipped if his perdictions are borne out to be false. Therefore, prophet of doom will always win out in the end.

Tom said...

Just reading this brings all kinds of blog topics to mind. The best prediction is that nobody is an expert of anything.

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