Don’t Be So Sure

There seem to be few things more appealing to people than lambasting others for being wrong. Yet, despite the boundless evidence that all of us are wrong quite a lot of the time, we still embark on vain searches for leaders who will not be. Do we really expect to find them?

Many of my friends work in the financial services industry, where forecasts and opinions are a regular part of the job. You can tell who forecasts for a living by their patience with other forecasters. You can tell who is amateur by the viciousness of their attack when another person’s forecast turns out wrong. We in the business noticed long ago the glass house we inhabit, and haven’t touched the rough edge of a stone in years. Newcomers to the world of forecasting haven’t devoured their share of ground glass, and so gleefully send the stones of criticism whizzing toward the latest gaff maker who, you can be sure, did his or her darnedest to be right.

In my own history of forecasting, one of the most fascinating ways to be wrong has been to believe too early that I made a mistake and then to be proven by later events to have been right all along. Consider the recent stock market and attendant comments from those trying to point where it will go next. A prominent prognosticator began saying a couple of weeks back that the market was due to go up any day now, then changed his tune to gloom…two days ago. Yesterday, the market surged 3.3%. He was wrong when he said two days ago that he’d been wrong. He’s too honest to ignore that and say now, “See, I told you it would go up!” but he could well do that only to see it go down again.

The worm turns, and about all we can count on are steady streams of cash. If you don’t own income-producing real-estate assets and at least some dividend-paying stocks, you’re in possession of a healthier pain threshold than I. Why? Because you’re own estimates of where prices are heading are bound to be wrong one of these months, too, and steady cash flow lessens the damage of downward arrows.

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