Fools of prophecy

I'm not a religious person, but you can find some wisdom Bible. is this prophecy concept is for fools. You see it almost everyday when it comes to investing: "war is inevitable" someone total. "Oil prices continue to rise," total of another. History is full of administrators (and the recipients of this policy window) who took risks when the unexpected happened. But still, all the clues to what is going to happen would seem to be the height of the Palm in hindsight.

In his book, Fooled by randomness: Hidden role of chance as life, talking about markets, Taleb concept of "Black Swan. Black Swan is an unexpected event that defies prediction.

Black Swan's disturbing property is unexpectedness creates conditions to occur in the first place. This happens due to the fact that simply because such a disaster from expectant as 9/11, you would do anything to prevent it. Even from the old "expect t ' won ' unexpected do any good. If you expect, it is not unexpected.

Another disruptive element is the so-called "hindsight bias." This means that "looking back, you rationalize every event happened to Sun as that occurred. In hindsight, it was clear the company collapse and would lose the cooperative. Why not sell the stock before? Perhaps you features unfortunate luck or a lack of skills or intelligence on your behalf, or both. The problem is that we get a sense of false security baicholt our forecast events.

If you look back in history, you notice the biggest hits of mankind had not predicted. The Web revolution that predicted? 9/11 who predicted? "Hindsight bias" mentioned before would lead you to believe they were performing the steps in a logic of ours.

Here's something most people in the finance industry is not talking, you need to know: discussions, paid to give recommendations of a particular stock is a good buy or sell, there is a certain way, to predict the future. It is always nice looking at their predictions back and analyzing their success rate (their prediction from what actually happened) find out how many disturbing facts.

What do you think their actual success rate? 80%? 70%? What is the success rate is good anyway? I would say if you're ready to get predictions the analysts ', you might expect to receive more than 50%. After all, 50% means that you match their performance will be the coin, you decide which States that if the market rise or fall.

Have hours of fun to know that on average, analysts have no shot better at predicting what would have happened if the stock market than flipping, currency. This is not something that happened only this year. This happened in the past, probably will continue to happen as people still struggle to be prophecy was fooled.

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The author has a B.A. in economics, is currently pursuing a degree masters in financial engineering. The author's speculating, and if it is trading in the markets since he was 17 years old.