Stock pickers, analysts, strategists, economists and even the Fed are no better at forecasting the “old economy” than they are the “new…
Forecasters have been really wrong on the economy recently, but it's nothing new: They've always been wrong.in the last 18 months. Dimon urged humility:"I would be quite cautious about what might happen next year," he said at the Future Investment Initiative summit in Riyadh, Saudi Arabia.
Strategists and analysts are poor at predicting earnings and economic trends. Economists are terrible. Even the Federal Reserve, with the finest economists in the world,And it's not any better in any other discipline. Forecasters in general are terrible. Forecasters, for example, are overconfident in their ability to make predictions. They also exhibit herd behavior, blindly following what others are forecasting. Or they select information that supports their own point of view, while ignoring information that contradicts it. These and other biases skew the interpretation of the data.
And it really gets complicated when you are trying to predict something as large as the U.S. economy, even if the prediction is only one year out.from 1997 to 2008 and found that the Fed's predictions for economic activity one year out were no better than average benchmark predictions. We're not going to throw up our hands and turn into nihilists. But after watching this Wall Street circus for 30 years, I have certainly become a lot more humble about my own forecasting skills, and everyone else's.
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