Perspectives on Forecasting – Basic Challenges and More….

Written in Collaboration with Dr. Ralph Finos

This is a short collection of quotes related [in some cases loosely] to market forecasting. Forecasting is a difficult and challenging endeavor. It can be a dirt job, but someone has to do it!

We’ll kick it off with a quote from Mr. Churchill, he is always to the point.

The Basic Challenge
The future is just one damn thing after another. – Winston Churchill

Prediction is very difficult.  Especially when it’s about the future – Anonymous

Our business is prophecy and if prophecy were certain, there would not be much credit in prophesying – Max Radin

Never mind the noise in the market, pay attention to the price of the fish – Bahamian saying

Forecasting Tools and Processes
Anything worth doing is worth doing poorly – GK Chesterton

If we knew what we were doing, it wouldn’t be called “Research” [or in our case forecasting!] – Albert Einstein

Sources and Data Quality
Every tool carries with it the spirit by which it has been created –  Heisenberg

Torture the data long enough and it will confess – Anonymous

Staying on Top of Your Forecast
None of us really understands what’s going on with these numbers. –  David Allen Stockman, Director US OMB, on the U.S. Budget, 1981

Every model, no matter how detailed or how well conceived, designed, and implemented, is a vastly simplified representation of the world, with all the intricacies we experience on a day-to-day basis. – Alan Greenspan

Be Open to Novel Outcomes
We do not know what the future will bring, except that it will be different from any future we could predict –  John Maynard Keynes

Normal science often suppresses fundamental novelties because they are necessarily subversive to its basic commitment. –  Anonymous

We can’t solve problems by using the same kind of thinking we used when we created them – Albert Einstein

We make progress in economic theory one academic funeral at a time.

While it is easy to poke fun at ourselves as we endeavor to create useful forecasts, the forecaster’s job is a difficult one. Fortunately, there are best practices and a body of work we can draw upon.

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