World Awash in Predictions

27 Jan

The collapse in Crude Oil has brought out an onslaught of predictions as to its future price which begs the question: Are there really that many ” experts” capable of predicting with any accuracy the future price of crude oil? In a world where Donald Trump and Bernie Sanders are  currently leading the race for President, one might expect that all predictions about the future should be taken with a huge grain of salt. In addition, at the very least one would expect that predictions about the future might contain some modicum of probability that the future might look somewhat different than the recent past. In Nassim Talibs book ” The Black Swan” he makes a very cogent point regarding the ability to accurately forecast the future. Talib points out that all predictions fall short, primarily because they do not have the ability to price the tail risks of any situation (Black Swans). While black swans in and of themselves are unknowable (by definition), there are some grey swans that we maintain currently exist. Grey swans might be defined as potential outcomes which are given almost no, or very little, probability of occurring. The biggest capital market gray swan we see out there today deals with the potential for commodity markets to self correct.

One Response to “World Awash in Predictions”

  1. Mark Kaler January 27, 2016 at 2:06 pm #

    Well said. Good to see you back

    Sent from my iPhone

    >

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