The Failure of Prediction
I was assuming that political analysts were in the business of making accurate predictions, whereas they’re really in a different line of business altogether. They’re in the business of flattering the prejudices of their base audience and they’re in the business of entertaining their base audience and accuracy is a side constraint.
University of Pennsylvania professor, Philip Tetlock, in his 2006 book on the subject. Nate Silver in his The Signal and The Noise, extended Professor Tetlock’s thesis to other disciplines, notably to investment market experts whose judgement was found to be no more accurate than that of their political counterparts. I note that the political experts in this quote, much like most financial experts, owe their allegiances wholly to their employers and not to the public. Thus their core business is earning returns for their employer and not returns for the consumer. This is a fundamental distinction that can lead to all sorts of havoc. And is why we urge investors to seek out professionals who operate with a fiduciary responsibility towards their clients.Tags: behavioral finance, Fiduciary