The Forecasting Business Shouldn’t Be This Bad
Those who try to divine the future would do a better job with a few simple changes.
Bloomberg, April 1, 2019
By now, some of you may have noticed that I am none too fond of the average Wall Street forecaster.
This isn’t because of some random prejudice, but rather, a view that has evolved based on long experience. It is backed up by solid statistical evidence that forecasters are not very good at forecasting.
It bears repeating that: 1) almost all forecasting is folly, and 2) forecasting is marketing. However, with a few small tweaks forecasting could be more useful, or at least more honest. Here are a few suggestions:
No. 1. Share the underlying model’s past performance: We’re all familiar with those who trumpet the accuracy of their forecasts. And now, you too can partake of their unique genius for X, for the low, low price of . . . whatever. . .
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I originally published this at Bloomberg, April 1, 2019. All of my Bloomberg columns can be found here and here.
