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The Illusion of Knowledge
Matthew Giampetroni added
The bottom line for me is that forecasts can’t be right often enough to be worthwhile.
Howard Marks • Attention Required! | Cloudflare
Matthew Giampetroni added
It’s hard to factor in a large number of considerations and especially to understand how a large number of things will interact (correlation is always the real stumper).
Howard Marks • Attention Required! | Cloudflare
Matthew Giampetroni added
The rule in this case is that macro forecasts rarely lead to exceptional performance. For me, the exceptionalness of the success stories proves the general truth of that assertion.
Howard Marks • Attention Required! | Cloudflare
Matthew Giampetroni added
People must recognize that the accuracy of forecasts in systems with phase transitions is dismal, even by so-called experts.
Michael J. Mauboussin • Think Twice: Harnessing the Power of Counterintuition
Even if their forecasts were true (they aren’t), no individual can get the same returns as the market unless he has infinite pockets and no uncle points. This is conflating ensemble probability and time probability. If the investor has to eventually reduce his exposure because of losses, or because of retirement, or because he got divorced to marry
... See moreNassim Nicholas Taleb • Skin in the Game: Hidden Asymmetries in Daily Life
Think about market forecasts. We’re very, very bad at them. I once calculated that if you just assume that the market goes up every year by its historic average, your accuracy is better than if you follow the average annual forecasts of the top 20 market strategists from large Wall Street banks. Our ability to predict recessions isn’t much better. ... See more
Morgan Housel • The Psychology of Money: Timeless lessons on wealth, greed, and happiness
“It’s frightening to think that you might not know something, but more frightening to think that, by and large, the world is run by people who have faith that they know exactly what’s going on.” -Amos Tversky
Howard Marks • Attention Required! | Cloudflare
Matthew Giampetroni added