Some Thoughts On Forecasting From Various Authors

“Prediction is very difficult, especially if it’s about the future.”

Nils Bohr

“An economist is an expert who will know tomorrow why the things he predicted yesterday didn’t happen today.”

Evan Esar

“A good forecaster is not smarter than everyone else, he merely has his ignorance better organised. ”

Anonymous

“Forecasting is the art of saying what will happen, and then explaining why it didn’t! ”

Anonymous

“An unsophisticated forecaster uses statistics as a drunken man uses lamp-posts – for support rather than for illumination. ”

After Andrew Lang

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Some Thoughts On Forecasting From Various Authors

“Those who have knowledge, don’t predict. Those who predict, don’t have knowledge.”

Lao Tzu

“Prediction is very difficult, especially if it’s about the future.”

Niels Bohr

“I have seen the future and it is very much like the present, only longer.”

Kehlog Albran

“An economist is an expert who will know tomorrow why the things he predicted yesterday didn’t happen today. ”

Evan Esar

“He who lives by the crystal ball soon learns to eat ground glass.”

Edgar R. Fiedler

Finished Reading: Ice Age By John And Mary Gribbin

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I had previously read this several years ago (it was published in 2001 and is a mere 101 pages). It is absolutely jam-packed with personalities and physics. I must admit I do not understand the physics but the main take-away from the book for me is the tenacity of three men: naturalist Louis Agassiz, a janitor named James Croll and a civil engineer named Milutin Milankovitch, who was born in Vienna but moved to Belgrade for the remainder of his life.

Several quotes I would like to share from the book, from page 3:

“And although we associate weather with the movement of masses of air around the globe, with high pressure systems bringing settled, dry conditions and low pressure systems bringing wind and rain or snow, as far as climate is concerned great ocean currents are much more important.”

From page 5:

“So we live in a relatively warm part of an Ice Age (or Ice Epoch), and the kind of changes needed to plunge us back into full Ice Age conditions can be produced by quite small changes in the heat budget of the Earth.”

And finally from page 8:

“To a human civilization, of course, an Ice Age would be a catastrophe. But on a planet now known to be more than four billion years old, the occasional Ice Age is part of the routine. It’s all a matter of perspective.”

This story entails approximately 150 years and I was astonished by the characters in this book: Louis Agassiz, who went beyond the call and took members of the Swiss Society of Natural Sciences up into the mountains to show his colleagues evidence of the Ice Ages and their effects.

James Croll was from Scotland and came from a very poor family and he became a voracious reader and realized at a young age that he wanted to be a thinker of big ideas. His health was suspect and he ended his career as a janitor, enabling him to study the Ice Ages and write a book on all his studies entitled Climate and Time In Their Geological Relations published in 1875.

And last but not least Milutin Milankovitch, who as a hobby or even better, an obsession that took thirty years working diligently to come up with a model of the prior Ice Ages. Even though this model fell out of favor in the 1950’s, and he died in 1958, he felt that his theory and calculations would stand the test of time.

With each of these three men, I learned in this small volume, the grit and determination, in addition to the passion when you have something that you wish to accomplish with your life. I give this book 5 stars out of 5 and would highly recommend you devote a short amount of time in your day to enjoy it and process what these individuals accomplished.

 

 

Some Finishing Thoughts From The Signal And The Noise By Nate Silver

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These are some quotes from the book which I wanted to share in which I feel are important for each of us who make prediction or forecast to explore:

From page 183:

“Getting feedback about how well our predictions have done is one way—perhaps the essential way—to improve them. Economic forecasters get more feedback that people in most other professions, but they haven’t chosen to correct for their bias toward overconfidence.”

From page 191:

“A forecaster should almost never ignore data, especially when she is studying rare events like recessions or presidential elections, about which there isn’t very much data to begin with. Ignoring data is often a tip-off that the forecaster is overconfident, or is overfitting her model—that she is interested in showing off rather than trying to be accurate.”

I encourage our readers to tackle chapter 8 entitled Less And Less And Less Wrong which gives a great introduction and analysis of Baye’s Theorem and how to use it in everyday analysis for all types of disciplines.

From page 267:

“The need for prediction arises not necessarily because the world itself is uncertain, but because understanding it fully is beyond our capacity.”

From page 292:

“Nevertheless, a commitment to testing ourselves—actually seeing how well our predictions work in the real world rather than in the comfort of a statistical model—is probably the best way to accelerate the learning process.”

From page 307:

“As Arthur Conan Doyle once said, “Once you eliminate the impossible, whatever remains, no matter how improbable, must be the truth.” This is sound logic, but we have a lot of trouble distinguishing the impossible from the highly improbable and sometimes get in trouble when we try to make too fine a distinction.”

From page 388:

“The goal of any predictive model is to capture as much signal as possible and as little noise as possible. Striking the right balance is not always so easy, and our ability to do so will be dictated by the strength of the theory and the quality and quantity of the data. In economic forecasting, the data is very poor and theory is weak, hence Armstrong’s argument that “the more complex you make the model the worse the forecast gets.”

From page 448:

“This book is less about what we know than about the difference between what we know and what we think we know. It recommends a strategy so that we might close that gap. The strategy requires one giant leap and then some small steps forward. The leap is into the Bayesian way of thinking about prediction and probability.”

These are just several thoughts in which are readers may digest, but I would suggest whole-heartily that you read it inspectionally and then turn around and read it analytically.

Key To Forecasting From Nate Silver In The Signal And The Noise

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The author in the chapter on baseball makes the point of what is the key to forecasting. On page 100, this is what he says:

“The key to making a good forecast, as we observed in chapter 2, is not in limiting yourself to quantitative information. Rather, it’s having a good process for weighing the information appropriately. This is the essence of Beane’s (The Oakland Athletics General Manager) philosophy: collect as much information as possible, but then be as rigorous and disciplined as possible when analyzing it.”

This immediately made me go back and think about process vs. outcome which Michael Mauboussin really stresses. I am working on starting a new business and I must remember to focus on being rigorous and disciplined in my decision making. I plan on going back to Mauboussin and reading to make sure I haven’t missed anything.

Currently Reading: January 16, 2014

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I am running a little behind in posting this but I ran across this article in The Futurist entitled: The Best Predictions of 2013 and wanted to share some of them.

(1) “Allergies will worsen over the next three decades.” The bottom line excerpt:

“About 50 million Americans currently suffer from seasonal allergies. That number is going to increase over the next few decades.” Source: U.S. Environmental Protection Agency, Live Science

(2) “U.S. crude oil imports will fall 32% by 2020.” The bottom line:

“For now, at least, it’s clear that fossil-fuel extraction everywhere will keep increasing. The whole world risks sinking into a deeper ecological hole and suffering even bigger shocks once fuel supplies tap out. The markets for fossil fuels are just going to keep getting bigger, but the supplies of those fossil fuels are not. The world needs to step up development of clean alternatives sooner and not later.” Source: Wood Mackenzie, global energy and metals industry consultants, quoted in Forbes, August 25, 2013.

(3) “More than 6 million years’ worth of video will be available to watch online by 2016.” An excerpt:

“The pressure is on all communicators to get attention and get to the point. Commercials on television are already getting shorter—even a 30-second ad seems long-winded to many viewers. Beware the ever-shrinking attention span of the general public.” Source: Fox Business

This article contains over thirty-two predictions with far more information than I could truly grasp. If you have any interest in the future and innovation, I highly encourage you to read this article.

Books I Have Read Thus Far In 2013

These are books I have read either inspectionally, analytically, or syntopically thus far this year. Some of these I have spent quite a bit of time on while others just to get the sense of the book.

(1) The Signal And The Noise     Nate Silver

I have almost finished this book and found it fascinating. I got pulled away on some other projects and I most likely need to reread it so I can get a full understanding. Highly Recommended!!!

(2) Spillover     David Quammen

This is a tremendous book and to be honest I could only read in small doses because of the intensity of death and dying. One of the best books of the year thus far!!!

(3) Fantastic Voyage: Live Long Enough To Live Forever     Ray Kurzweil and Terry Grossman, M.D.

I have read this book numerous times and since I have diabetes I am always looking for ways to improve my health. Highly Recommended!!!

(4) Labyrinths: Selected Short Stories And Other Writings     Jorge Luis Borges

There are certain parts of this book that I really enjoyed and others I most likely need to revisit and see if I can understand.

(5) Between Parentheses      Roberto Bolano

This was the second time I read this and I have to say I enjoyed it more the second time and I will most likely read it a third time to get a better feel of Spanish authors.

(6) The Beginning of Infinity     David Deutsch

I did an inspectional reading of this and I must read this slowly to get a good understanding of what he is trying to say.

(7) The World Until Yesterday     Jared Diamond

After having read Guns, Germs and Steel , this seemed a natural and I did an inspectional reading thus far!!!

(8) The Fabric Of Reality    David Deutsch

I am intrigued by parallel universes and I have started rereading certain parts of this book to get a better understanding of parallel universes.

(9)  Scorecasting: The Hidden Influences Behind How Sports Are Played And Games Are Won     Tobias J. Moskowitz and L. Jon Wetheim

I was really looking forward to reading this but was disappointed. I will try to give it another go later!!!

(10) Civilization: The West And The Rest     Niall Ferguson

I have done an inspectional reading and it looks to be very interesting!!!

(11) The Emperor Of All Maladies     Siddhartha Mukherjee

I have also done an inspectional on this and I have not made enough time to work it in!!!

(12) Far From The Tree: Parents, Children And The Search For Identity     Andrew Solomon

One of the most thought-provoking books I have read because of the subject matter on which I was not familiar. If you have any interest in understanding deaf, prodigies,autism, dwarves and other societal issues, then this is a fantastic book for you.

(13) Diaspora    Greg Egan

Greg Egan is my favorite science fiction writer as he takes me to places and makes me think outside the box. A tremendous book!!!

(14) The Landscape of History     John Lewis Gaddis

I reread this to get a better understanding of the study of history. I really got a lot out of this.

(15) The Historian’s Craft      Marc Bloch

Same as number fourteen

These are the books that I read through March and I will shortly bring you the books that I have read April through July.

Cover of "The Fabric of Reality: The Scie...

Cover via Amazon