In one of the best-known investigations into the value of expert opinions, University of California psychologist Philip Tetlock solicited predictions from 284 professional economic and political forecasters, asking them to rate the probability of several potential outcomes. Most of the questions had only three possible outcomes, writes Jonah Lehrer, author of 2009’s “How We Decide.” Yet the pundits picked the right answer less than one-third of the time. In other words, writes Lehrer, “A dart-throwing chimp would have beaten the vast majority of professionals.” What’s more, Tetlock found that the most famous pundits tended to be the least accurate, consistently making overblown forecasts. Those with doctorates were no more accurate than those with only undergraduate degrees. Journalists were just as accurate as professors.
The problem, Tetlock concluded, was the certainty of the experts. Experts, especially prominent ones, were so confident in the accuracy of their particular world view that they imposed a “top-down solution on their decision-making process,” writes Lehrer. Instead of weighing the evidence and trusting their gut, the experts disregarded evidence that contradicted their world view.
And finally, some advice toward the end of the article that I thought was worth a mention. Advice I agree with very much, it is one of the the chief reasons I have always reacted to negatively toward people who express too much certitude.
The best pundits realize their predictions might be wrong, so commentators who seem most confident are the most dangerous.
The best pundits realize their predictions might be wrong, so commentators who seem most confident are the most dangerous.
Just popping briefly to say hi. And great topic Thor! thanks.
ReplyDeleteThe headline holds good advice: "Beware of experts bearing predictions".
More generally, I think it would have been wise for the sheeple not to rely too heavily on a minority of experts.
But how could it have been otherwise, when they've got the knowledge (at least the knowledge of the system they've built) while all you get are random pieces of the puzzle, at best..
Oh well.. that's the way things are.
@Denise, just read your May 24, 2011 5:03 PM comment, sorry for the delay.
ReplyDelete"It is quite interesting to see that the students do not understand the circumstances as the media filters work both ways. Nothing quite like talking to people on the ground about the true economic conditions that people face on both sides of the ocean."
It's interesting to take the time to check the pulse on other sides of the "information", indeed :).
Dead-cat bounce from oversold conditions?
ReplyDeleteICan
Great one, Thor. So true too. Then why oh why do we sit around and listen to all of these exaggerated predictions? Are we just wired this way? Nobody knows shit, especially now. That's the bottom line.
ReplyDeleteOr should I say, VERY few people can continually accurately predict what's going to happen. Too complicated with too many moving parts. Every now and then some get it right, but that's only after being wrong quite a bit for a long time. No shame and that, of course, unless you're passing yourself off as an "expert" who knows all.
ReplyDeleteCanadian banks sold off, despite reporting very good numbers and increasing dividends, case in point RBC.
ReplyDeleteICan
U$D is carrytrade today.
ReplyDeleteUS data sucks.
ICan
By the OBL top has yet to be breached. Just saying. And the Manny Top was only breached by a smidgeon, speaking of idiots making predictions. LOL.
ReplyDeleteDefinition of "expert":
ReplyDeleteEx is a has-been.
Spurt is a big drip.
@ICan:
AS I recall, we usually get up days before long weekends, or several days before a holiday week.
Notice how the market shrugged off the housing numbers? That is a real real bad economic indicator, and normally I would have expected to see a free fall from that. But we went up.
This could be a play.
I'm keeping my rimm short and my AAPL long.
Another one that may be breaking out is CNH. Another one of those overseas profit companies. I read they have 38 factories.
ReplyDeleteCan you imagine? 38 factories. Wow.
Anyway, they've had some real nice volatility, and I'm thinking that if they confirm the downchannel breakout today, I may long them sometime Monday. If you draw the resistance line, it could reach 44.50 or so in a few days.
The relative strength's turned quite positive since the 17 of May.
@Mannwich:
ReplyDeleteDid you go down to the pub with a chart and put it over the dartboard? I'd love to know how you did that.
Morning guys!
ReplyDelete@Rock: That's about what I did, Rock. And had a few pints of beer. That's my trusty strategy of making market calls. LOL. It works at least 1 out of every 50 times or so. Not any worse than some of the "expert" blowhards on the boob tube these days.
ReplyDeleteThis doesn't surprise. An anecdotal look around at home listings (with no "Sold" signs on them in prime sellign season) tells me it's likely been a very weak home sales season thus far.
ReplyDeletehttp://www.calculatedriskblog.com/2011/05/consumer-sentiment-increases-in-may_27.html
I thought this was EXCELLENT:
ReplyDeletehttp://www.nakedcapitalism.com/2011/05/michael-hudson-breakup-of-the-euro-is-iceland%e2%80%99s-rejection-of-financial-bullying-a-model-for-greece-and-ireland.html
Great chart that sums up today's post.
ReplyDeleteFrom http://dshort.com
"The same patterns over and over".
http://dshort.com/charts/chris-kimble-chart.html?/2011/index-trio-0527
Bull market still intact.
ICan
From that post. REALLY good stuff:
ReplyDeleteFinancial power is achieving what military conquest did in times past. Pretending to make indebted economies more competitive, the actual aim is to squeeze out enough payments so that bondholders (and indeed, voters) will not be obliged to confront the reality that many debts are unpayable except at the price of making the economy too debt-ridden, too regressively tax-ridden and too burdened with rising privatized infrastructure charges to be competitive.
Cutting back public spending and regressive tax shifts dry up capital investment and productivity. Such economies are run like companies taken over by debt-leveraged raiders on credit, who downsize and outsource their labor force so as to squeeze out enough revenue to pay their own creditors – who take what they can and run. The tactic of this financial attack is no longer overt military force as in days of yore, but something less costly because its victims submit more voluntarily. Third World countries demonstrated the destructive consequences from the 1970s onward under IMF austerity planning. Europe is now repeating the same shrinkage.
But the intended financial victims are fighting back. The attackers are not losing their armies and manpower, but their balance sheets are threatened – and hence their own webs of solvency with which they sought to entrap their prey. Greek labor unions (especially in the public enterprises being privatized), the ruling Socialist Party and leading minority parties rejected the radical sacrifices being demanded by Eurozone officials.
Manny - I was eying that article this morning before I went to work!
ReplyDeleteRE: "experts" - I've always had a problem with people and professionals who seem to convey too much certainty when it comes to the things they say. My rule of thumb, especially the last two years, is that the more certain a person is about something, and the more statements or predictions a person makes in this vein, the less accurate they tend to be.
One of the nice things about being with a group of people for as long as we have been together, is that we've all become very cynical when it comes to people and "economists" who are like those described in the article so none of as really take anything these guys say without a giant grain of salt anymore!
@Thor: If you haven't read the whole thing, please do. It's so spot on regarding everything that's been happening, and continues to happen. I almost leapt off my chair reading it. I keep trying to relax thinking that maybe things will go on and resolve themselves without another crisis and then I read articles like these that bring me back to reality. This is a super slow motion train wreck leading to another disaster.
ReplyDeleteManny - reading now . . yes, this is really very good! Long though, so it'll take me awhile to get through it. Thank you!
ReplyDeleteHere I think is the key point of this article, and a point I think more and more people are starting to figure out for themselves.
ReplyDelete"The idea is to slash government employment, lowering public-sector salaries to lead private sector wages downward, while cutting back social services. "
@Jeff,
ReplyDeleteMarc Faber on Opulence, struggling middle class, supercars, and wars.
ZH, Trader Mark and his own blog has link to his interview with bloomberg.
http://marcfaberblog.blogspot.com
Tata said the same thing about Ambani home in Mumbai. U$D billion home vs. slums.
Globalisation has done wonders for Indian people as a whole, but there are huge differences in ultra rich and lower middle class.
ICan
Ican - yeah, Globalization has been wonderful for the third world. Not so much for the first world. Our people should not be made to suffer so that people in China and India and the rest of the third world can buy Blueray DVD players. :-/
ReplyDeleteWell, I think it could potentially be a good thing for most everyone if human nature weren't as it is and/or those at the top always in a greedy, morally and ethically bankrupt race with their brethren for more, instead of realizing it's in their best interests that those beneath them aren't continually punched in the gut over and over and over. It's all about entitlement at the top. Look there first. Those who have the most have the biggest responsibility to lead by example. Our "betters" are leading quite badly, to say the least.
ReplyDeleteShit like this I think is helping to wake people up.
ReplyDeleteThe R's trying to prevent a very popular woman who clearly has the best interests of the average citizen as her top priority.
President Barack Obama won’t be able to make any executive recess appointments when senators are home next week for the Memorial Day recess – including Elizabeth Warren, Obama’s pick to head the Consumer Financial Protection Bureau.
The Senate will be in “pro forma session” because Republicans are threatening to block adjournment, Senate leadership aides said. A senator who lives in nearby Virginia or Maryland will be asked to briefly open and close the session on those days, during which time no business will be conducted.
@Thor(1:16)
ReplyDeleteAnd who is responsible for that?
"Our people should not be made to suffer so that people in China and India can buy Blueray..."??????????????
WallStreet is giving them charity money?
ICan
ICan - Business interests in this country are responsible for it. Our politicians for blindly going along, and our citizenry for electing them in the first place.
ReplyDeleteRegardless of who's at fault, it's wrong and I'll put money on the dismantling of "globalization" once things start getting bad enough. Eventually, although it may take a decade, most people will see what's going on and the current crop of idiots we have in congress will be voted out and/or put in jail where they belong.
I really do believe people are starting to wake up. I think maybe the best thing that could have happened to this nation was the landslide wins of the Tea Party last year. They have clearly over-reached, read the "mandate" wrong, and are basically putting all their cards on the table for all to see. Like Manny often says, they're not even trying to hide their intentions.
I know we talk a lot about "The Sheeple", and maybe the citizenry of this country are a lot more like sheep than people. Unfortunately, the Sheeple have entered the slaughter house, now that the average person is starting to see real pain, I don't believe that most people are really that stupid, they'll vote differently next time. At least the one's paying attention will, and more and more people are paying attention all the time.
Sorry for my little rant. It's Manny's fault, that article pissed me off :-P
ReplyDeleteI wonder, is Denise seeing any of this in Spain?
ReplyDeletehttp://www.zerohedge.com/article/spanish-police-brutality-multiple-choice-time
@Jeff(1:23)
ReplyDeleteX10.
ICan
@Thor:
ReplyDeleteIn support, from NELP:
http://www.nelp.org/page/-/Justice/2011/UnbalancedGrowthFeb2011.pdf?nocdn=1
"Lower-wage industries constituted 23 percent of job loss, but fully 49 percent of recent growth
"Mid-wage industries constituted 36 percent of job loss, and 37 percent of recent growth
"Higher-wage industries constituted 40 percent of job loss, but only 14 percent of recent growth."
The article is a good read. The current recovery is much worse than the jobless recovery of 2001. But they are hinting that the jobless recovery of 2001 is the real cause of the Great Recession.
Very interesting.
@Rock: That's the camp I'm in - the one that says part of the reason our "recovery" is so weak this time around is because we never really "recovered" from the dot.com collapse. Like this current "recovery", it was a weak, even fake/fabricated/paper recovery driven by easy/cheap credit to the money-changers and power brokers, with the thought that enough of it would trickle down to the Sheeple to keep enough of us happy or least content enough to avoid having a real uprising of sorts. Three fabricated, largely fake bubble-induced economies, one after the other, with each passing one weaker than the next. Where's it all headed now? Is there really any reason to be optimistic that things will suddenly take off now in a real, substantive way?
ReplyDeleteI am all for people who show confidence in who they are and can back up their theories with reasoning on why they believe certain things may or may not happen.
ReplyDeleteRock and his "X" Short is a good example, of this.
Because Rock does not want to loose money he has done due diligance, out lined his reasoning and with confidence has done what he believes is the correct move.
But Rock also understands there are way too many moving parts to make even the best researched position 100% accurate.
It seems that most "Experts" do not want to make concessions for all the other moving parts
Mutt
@Mannwich:
ReplyDeletenot much optimism here. Maybe I'm glad I'm old.
Anyway, it looks like it's almost time to bail out the banks again.
Based on the Mexican and Argentinian sovereign debt defaults, the debt was written down by 35%. I think that means the debt holders lost 35% of their investment.
US banks are the 4th largest holder in the world of Greek sovereign debt. They won't be able to afford the haircut.
That means we'll have to bail them out again.
Bloomberg says that's why the bank stocks are down.
Manny - if I may channel my dead grandfather, this is all just a bunch of horse shit! Agree 100% with you and Rock, we had a mirage economy for nearly a decade and what we have now is not only even more of a mirage, it's even weaker because of it.
ReplyDeleteRock - Care to take a guess on how much of a haircut they're going to see this time around? I'll bet you it's at least double Mexico and Argentina.
ReplyDeleteI think we get Denise back next week yes?
ReplyDelete@Thor:
ReplyDeleteI'll take that bet.
I'll bet it's close to the same, but coupled with a moritorium of payments. I saw the Greek president on Bloomberg who said they need about a year to get their act in order, so being a politician, I'd double that.
I think 35% and a 2 year moritorium.
(I'm not so smart, I got this estimate after reading
http://www.scribd.com/doc/33382381/Fitch-sovereign-Credit-Crisis
)
Down for a 4th week. Staying short, have a great weekend.
ReplyDeleteI think we're off Monday, Sleeping now.
@Mutt:
That's why I have stops. That's why I use stops. That's why I set stops. Most important thing is to set stops.
If I had Dastro's capabilities, well, it might be different.
One more thing before I sleep, do you remember
http://anonymoustraders.blogspot.com/2010/12/reits-time-may-have-come-again.html
? (pat-pat). A guy on Bloomberg said Reits are all reporting higher occupancies, NY is at 1% vacancy. I think some of these REITs could be good long-term plays.
Here's one last thought for tonight.
ReplyDeleteMany of Greece's problems may be solved by dropping out of the Eurozone.
I wonder if Germany is thinking about dropping out. Wouldn't that be a gas? If that happens, my previous prediction of a Braxton Hick needs to be revised: That would be a quintuplet breech birth for our market.
Oh, and BTW, my thinking the reason there will be a small Hick if Greece defaults is because Benny will step in and set up QE3 to get the banks through this one. As Dastro says, will see. These are exciting times, for sure.
Greetings from Barcelona,
ReplyDeleteAs we walked to our restaurant this evening we passed the square that has become a permanent protest camp, with banners, tents, large spray painted signs and probably 10,000 people milling around, clapping, singing, and chanting. Very peaceful, but unlike the protests in Madrid, these people have not gone home sine the election.
Of course, this is the weekend and Friday night so there are so many people regardless but it is impressive.
This is a large square, one city block long and wide and the boulevards here are wide.
I'll see if I can get a photo. We did not have our camera with us so we did not get to take any pictures. Too many pick pocketers!
We have not had time to see the news so I have not seen what the local news is saying.
On the way home on the street parallel to the protests were riot squads lined up with fierce looking riot police, guns and billy clubs. There were about 6 vehicles and other police presence is everywhere. They blocked the main street leading to the square so the riot police have easy access if something breaks out.
Tomorrow evening is the Barcelona v. Man U UEFA Cup final and if BFC wins, they are expecting all hell to break out here. We are going to hunker down in our room to watch the game when we return from dinner.
ReplyDeletePolice Clear Protesters in Barcelona Spain by Force
ReplyDeletePolice Use Force To Clear Protestors
The protestors felt that they were being forcibly removed and resisted the police as best they could, shouting, "This isn't a clean up it’s a forced removal". According to the Spanish newspaper, El Pais, in an article by Rebeca Carranco dated 27 May 2011, a total of 121 people were injured in the ensuing mêlée, 37 of whom were police officers and there were two arrests.
Around thirty rubbish collection vehicles cleared away tents, tarpaulins, placards, sleeping bags, propaganda, computers and food from the Plaza de Catalunya. Rebeca Carranco, in her article in El Pais, described it thus: "the images of the mountain of objects appeared more like a rubbish tip".
Read more at Suite101: Police Clear Protestors by Force in Barcelona, Spain http://www.suite101.com/content/police-clear-protestors-by-force-in-barcelona-spain-a373124#ixzz1Nalbu0R1
This plaza is about 4 blocks from our hotel. Sounds like things got ugly this morning but we were unaware of it.
ReplyDeleteMost people were going about their business this evening and the kids were back in the square, and spilling out into the streets. We took another way home to avoid them.
Here is a link from the NYT - my internet connection is too slow to look at the videos so I have not seen them:
Police Clash with Protestors in Barcelona
And many people keep telling us that Catalonia is NOT Spain. Lots of resentment over that issue.
ReplyDeleteWe thought we would be taking a nice vacation and all of this stuff has happened. Pretty interesting view into a Democracy.
It does illustrate that the young people are fed up with their governments whether they are led by dictators, or right or left wing elected officials.
And the young people with whom we have spoken to are defiant and want change.
So after reading about them clearing the square I now see why the riot police were there. How weird that we did not know this even though we are just a few blocks away.
ReplyDeleteThe protesters in Madrid are still occupying the squares there, also. The people seem to be getting more defiant as the days go on.
Thanks for the update, Denise. Check out the video link that I posted from ZH if you can. Stay safe. Watch the wacking of this gal just seemingly standing the police. I smell trouble brewing. The people will stay peaceful for only so long and once the police start acting with brutality then that's when things could get ugly fast. I may watch that same soccer match from a pub safely in downtown Minneapolis tomorrow afternoon.
ReplyDeletehttp://www.zerohedge.com/article/spanish-police-brutality-multiple-choice-time
And I DO still think it's a matter of time before that happens here, maybe even next year leading up the elections. Everything feels so on edge these days. What's interesting is that I even feel that tensino with people I know lately too. It seems to me that mood is deinitely teetering and time running out on both the E&P of "extend & pretend". We certainly live in interesting times.
ReplyDeleteI return home Sunday so see everyone next week.
ReplyDelete@Denise: ..."young people fed up with (all) governments". It's a borderless battle of global elites and their government lackeys against everyone else but too many in the Sheeple still don't see it that way (although that's changing). That's been my stance and I'm sticking with it, for now, anyway.
ReplyDeleteBe safe, Denise!
ReplyDeleteManny,
ReplyDeleteThat video was incredible. We walked right by the same area tonight for dinner. No problem but the police were everywhere.
@Denise: I thought so too, Denise. If that can happen in a European country like Spain in this day and age (open police brutality), then I have a sneaking suspicion that we'll see it in other places in Europe eventually and probably even the U.S. They were literally firing rubber bullets at people and those things can cause great injury or even death. It's all just taking time to play out and sink in with the Sheeple. The elites and their lackeys either don't care, as they prepare themselves for the coming storm by taking everything left that's not been nailed down, or are simply clueless about what to do at this point. Not sure which theory that I favor.
ReplyDeleteThe protests are confined to the square, primarily, and we did not hear anything this morning so they are not using sirens any more than usual. Good thing, the tourists will leave if the city goes up for grabs. But it is the police who are violent, not the protesters from what I can see.
ReplyDeleteWe are very safe and have only felt threatened by the pick pocketers. :-0
@Denise: Exactly (the police being the instigators) what I'm reading too. All this will do is serve to embolden the protesters even more, and allow them to recruit even more to come out. Neither a humane nor smart strategy by the police.
ReplyDeleteCorrection: By the government. The police are merely carrying out orders by the government.
ReplyDeleteThat could be a real mess down there with that big game looming.
Manny,
ReplyDeleteEspecially since all of this violence occurred simply because they wanted the square cleared. There is definitely something going on when they injure people for no reason. It only makes everyone angrier.
We were saying we were very happy that this was not the US because there would have been guns and more incitement to violence.
The people have told us that they are simply fed up with the mess that has been made by those in power and feel hopeless about the future. Thankfully they have a strong safety net as it would be terrible here if they did not have some government support (ironic, I know) during these times.
Sick, hungry and desperate people do not keep silent forever. And this is a democracy, not Egypt or Tunisia.
That is on everyone's mind. If they win, mayhem will break out, if they lose mayhem may break out. The last thing this city or the rest of Spain needs is ANY soccer game. It is a matter of their honor from what I can tell.
ReplyDelete@Denise: But bankers and the uber-rich investment community must never, ever be forced to take any losses or sacrifice anything so that countries can truly recover. That's the entire crux of the issue and has been from Day 1. Read this Michael Hudson post (long) if you have time. He really hits it out of the ballpark.
ReplyDeletehttp://www.nakedcapitalism.com/2011/05/michael-hudson-breakup-of-the-euro-is-iceland%e2%80%99s-rejection-of-financial-bullying-a-model-for-greece-and-ireland.html
That is a great article, Manny. Just like someone else just said, they don't even bother to hide the fact that they want to punish the average citizens by saddling governments with the bank debts, while the bankers sail their yachts, eat caviar and cheat on their taxes.
ReplyDeleteDenise!!! OMG, what is up with our vacation?!?! Seriously, I know we joked about it, but this is getting a little silly (or is it scarey?). Or is it really merely indicative of what's going on in the world today, not just here, but everywhere.
ReplyDeleteI must admit that I'm not reading much about this in the MSM here, guys, am I not reading the right places? Wolfie, is this big news in France? I know you don't watch a lot of MSM news, but are people talking about it at all?
Manny, could not agree more with you that this could absolutely happen here. Maybe not on a national scale, but I could definitely see these kinds of protests happening here. Come on! We all know that things aren't going to be getting appreciably better anytime soon. We've talked about TPTB trying to take us down into a slow landing to the "new normal" but I think things are starting to spin out of their control, beyond their collective ability to hold everything together for much longer.
And please stay safe!
ReplyDeleteFormer NH Senator joins Government Sachs, I mean Goldman, as International Advisor. You cannot make this shit up. The strip mining of the U.S. will only stop when We the Sheeple force it to stop. No wonder why he was a big defender of Goldman. There's your payback Judd.
ReplyDeleteLike I said - Horseshit
ReplyDelete