Give the long thread on timing the market, I convinced myself to post a link to a very interesting podcast here. It also applies to our previous forays into “The Wisdom of The Crowds”.
I highly recommend it and many of the Freakonomics podcasts to all, here is the link for this one called "how to be less terrible at predicting the future…
http://freakonomics.com/2016/01/14/how-to-be-less-terrible-a…
Not related to the stock market or investing, but sort of to the prediction of timing the market. Here is the teaser.
Experts and pundits are notoriously bad at forecasting, in part because they aren’t punished for bad predictions. Also, they tend to be deeply unscientific. The psychologist Philip Tetlock is finally turning prediction into a science — and now even you could become a superforecaster.
Snippets:
about dogmatism blinding predictive capability…
I think an unwillingness to change one’s mind in a reasonably timely
way in response to new evidence. A tendency, when asked to explain one’s predictions, to generate only reasons that favor your preferred prediction and not to generate reasons opposed to it…
IARPA is Intelligence Advanced Research Projects Activity. And it is modeled somewhat on DARPA. It aspires to fund cutting-edge research that will produce surprising results that have the potential to revolutionize intelligence analysis…
They set up the performance objectives in 2011, very much based on in-the-wisdom-of-the-crowd tradition. The idea being that the average forecast derived from a group of forecasters is typically more accurate than the majority, often the vast majority of forecasters from whom the average was derived. So they wanted to see whether or not we could do 20 percent better than the average, 30 percent, 40 percent, 50 percent as the tournament went on…
(We are interviewing a member from the winning team that consistently beat the competition every year over a 4 year period, showing you can beat “the wisdom of the crowd” and you can forecast difficult and unique events.
Foresight isn’t a mysterious gift bestowed at birth. It is the product of particular ways of thinking, of gathering information, of updating beliefs. These habits of thought can be learned and cultivated by any intelligent, thoughtful, determined person.”
About superforecasters…
They’re less likely than ordinary people, regular mortals, to believe in fate, or destiny. And they’re more likely to believe in chance. You roll enough dice enough times and improbable coincidences will occur…
I think they’re often proud of what they’ve accomplished, but I think they’re really very humble about their judgments. They know that they’re just often very close to forecasting disaster. They need to be very careful. I think it’s very difficult to remain a superforecaster for very long in an arrogant state of mind…
I think humility is an integral part of being a superforecaster, but that doesn’t mean superforecasters are chickens who hang around the maybe zone and never say anything more than minor shades of maybe. You don’t win a forecasting tournament by saying maybe all the time. You win a forecasting tournament by taking well-considered bets. …
They tend to be more actively open-minded. They tend to treat their beliefs not as sacred possessions to be guarded but rather as testable hypotheses to be discarded when the evidence mounts against them…
there are a few mathematicians and statisticians among the superforecasters, but I wouldn’t say that most superforecasters know a lot of deep math. …
Go have fun, no need to drag out this OT topic with replies. Enjoy.