The Worst Forecasts of The Last 150 Years
One of the things I enjoy doing is collecting forecasts. It doesn’t matter whether the forecast is about hurricanes, the weather, technology, the economy or the financial markets. If someone is bold enough to make a claim about the future, I have a tendency not only to listen but to bookmark their comments for the sake of posterity. This practice has made me appreciate how horrible most forecasts actually are.
The job of the forecaster in reality is very unique. Prediction is concerned with future certainty. In this manner, the essential objective of determining is to distinguish the full scope of conceivable outcomes and arrive at a best possible outcome based upon hard data and statistical probabilities. Thus, the forecasters task if they are to be effective is to help navigate the map of uncertainty and to minimize that risk as much as possible.
Uncertainty makes people uncomfortable. Not knowing what’s going to happen creates a sense of stress in many people. That’s why we often are drawn on predictions made by leading experts to help make decisions in our daily lives. Sadly, history has shown that experts love to see their names in the headlines, but their perspectives aren’t necessarily helpful to the normal person trying to anticipate what the future has in store.
Irving Fisher – Economist
#10 Famous economist Irving Fisher Predicting a Stock Market Boom A Few Days Before the 1929 Stock Market Crash. Fisher was quite possibly the first celebrity economist in the 1920’s. He was very fond of giving interviews and commenting on economic affairs. Fisher stated that “stock prices have reached what looks like a permanently high plateau. I expect to see the stock market a good deal higher within a few months.” A few days later, the stock market crashed with devastating consequences and over the next few years fell over 80%! Ouch!
Paul Samuelson – Economist
#9 Economics Nobel Prize Winner Paul Samuelson predicting that the Soviet economy would overtake the United States economy somewhere between 1984 and 1997. He stated this in all 15 editions the most popular economics textbook in the post-world war era which has sold five million copies over six decades. Samuelson’s textbook has been translated into 41 languages.
Former Federal Reserve Chairman – Alan Greenspan
#8 Alan Greenspan on Interest Rates
In September 2007, former Fed Chairman Alan Greenspan released his memoirs entitled The Age of Turbulence: Adventures in a New World. In the book, he stated that the economy was heading towards double-digit interest rates due to “expected inflationary pressures.” Maybe his successors Ben Bernanke, Janet Yellen and Jerome Powell didn’t read his book but as the graph below illustrates, the Fed adopted a “low interest rates equals prosperity mandate” in 2007 which has survived for the last 13 years. This quantitative easing/modern monetary theory interest rate manipulation has driven the yield of the 10 year Treasury to 0.6%. Whoops!
Ten Year Treasury Yields
Side note: All prospective Fed Chairmen need Congressional approval. When Mr. Greenspan appeared before the Senate on July 21, 1987, before his confirmation hearing, Senator William Proxmire from Wisconsin had studied his forecasts from 1974 to 1986 and found his record in forecasting interest rates as the head of the Council of Economic advisers to be “ utterly dismal.” Yet he still got the gig of Fed Chairman in dictating national monetary policy and interest rates.
Alexander Graham Bell’s Telephone
#7 William Preece, British Post Office In 1876. “The Americans have need of the telephone, but we do not. We have plenty of messenger boys.” New technology is always dismissed in this manner by the current gatekeepers.
The Wright Flyer
#6 Simon Newcomb, Canadian-American astronomer and mathematician, 18 months before the Wright Brothers flight at Kitty Hawk in 1902. “Flight by machines heavier than air is unpractical and insignificant, if not utterly impossible.” This quote was printed far and wide in newspapers across the world to show how foolish man’s attempt at flight really was!
#5 Orville Wright – “No flying machine will ever fly from New York to Paris.” (1920) As hard as it may be to understand, inventors are often too close to their inventions to understand the possibilities or the innovations that others will bring to the table. Only a few years after Orville Wright made this statement Charles Lindbergh crossed the Atlantic on May 20, 1927 ushering in a new era of transcontinental air travel.
Thomas Watson – Founder of IBM
#4 “I think there is a world market for maybe five computers.” Thomas Watson – Founder IBM (1943)
Hard to believe that one of the most dominant forces in business technology today had this “realistic perspective” before the PC was developed.
Ken Olson – President Digital Equipment Corporation
#4 Ken Olson, President, Chairman and Founder of Digital Equipment Corporation. “There is no reason for any individual to have a computer in his home.” This forecast was made in 1977 right at the beginning of the computer revolution.
Popular 1950’s TV Set
#3 Daryl Zanuck. Movie Producer 20th Century Fox. (1944)
“Television won’t last because people will soon get tired of staring at a plywood box every night!”
Estimates are that over 4 billion television sets exist in the world today!
#2 T.A.M Craven – “There is practically no chance communications space satellites will be used to provide better telephone, telegraph, television, or radio service inside the United States.” (1961)
Today, tens of thousands of satellites have been launched over the last 50 years to better global communications. These satellites are responsible for GPS tracking and better reception for your telephone, radio, and television.
Steve Ballmer – Former CEO of Microsoft
#1 “There’s no chance that the iPhone is going to get any significant market share.” Steve Ballmer CEO of Microsoft (2007)
I could share hundreds of these types of forecasts covering all facets of life. Sometimes, I can assure you, it is a lazy journalist following a simple desire to get an outlandish claim from an authoritative personality.
The formula for attention is “Bold Claim + Celebrity = Controversy”
Today that is known as clickbait, a statement designed to get clicks and eyeballs to a news story or article. Sometimes though these forecasts were created by the ego of the forecaster who was simply elevating their self-importance in the media.
But as you ponder these examples of horrible forecasts, I also want you to think about what makes for a good forecast.
Understanding what makes a solid forecast is key to enhancing your competitive advantage.
Ultimately forecasting is about unambiguous decision making that take into account data science and global economic activities. The error in each and every one of the forecasts that I shared with you was a rush to conclusion without analyzing all of the facts. In other words a bad forecast is often just an opinion disguised as a fact.
In a nutshell, data trumps intuition every time!
This is critically important in the world of trading. What traders need and want is a statistically accurate method with a low false alarm rate that finds the best trends at the right time.
We live in a world that just a few short years ago economists told us could never occur. I am referring to negative interest rates, negative crude oil prices, skyrocketing metals prices and unheard of volatility in the financial sector.
How will the Fed’s printing press affect your investments this year?
How confident do you feel in the decisions you are making for your retirement?
How good are you at making sense of it all?
At Vantagepoint A.I. our focus for 40 years has been to Empower Traders Daily with our Machine Learning, Neural Networks and Artificial Intelligence Market Forecasts.
Our forecasts are created by looking at the top 32 drivers of an assets price. We do this from the foundational perspective that we live in a global marketplace. What happens in one part of the world has global implications and you charts and analysis need to communicate this information to you before you ever think of putting on that next trade.
Moving forward I want you to think long and hard about HOW you are going to trade the markets if you do not have an edge. As the volatility of the past few months becomes commonplace are you prepared?
Think about those losing trades and ask yourself what did you learn from that experience? What is your method for analyzing risk?
Are you capable of finding those markets with the best risk/reward ratios out of the thousands of trading opportunities that exist?
Here is a snapshot of our published forecasts on the S&P 500 over the past 3 months:
S&P 500 With Vantagepoint A.I. Forecast
Or consider that every day our software creates a daily trading range forecast for every stock and asset that we monitor. This next chart is of ecommerce platform SHOPIFY. Look at how accurate the predicted ranges were. This is a short term traders dream.
Shopify with Vantagepoint Predicted Range Forecast
What has your performance been like over the past year?
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