Superforecasting Part II: Portrait of a modal superforecaster
In Part I of this two-part series, we covered a framework for improving one’s forecasting skills that started with asking good questions, quantifying one’s forecasts, and keeping score of the outcomes. Part II will conclude with a portrait of the modal superforecaster. In his book “Superforecasting: The Art & Science of Prediction”, Tetlock identifies a […]
Would Kindleberger expect a boom in the US?
Earlier this year on my honeymoon, I was sitting by the pool re-reading the financial history classic: “Manias, Panics and Crashes” by the legendary Charles Kindleberger. Required reading for any student of financial history (though not necessarily on one’s honeymoon), I was struck by the way many historical booms and busts tended to rhyme. And […]
BIS introduces the Risky Trinity
The Bank of International Settlements (BIS) is arguably one of the more attuned regulatory bodies out there. With 60 member central banks from around the world covering 95% off global GDP, the BIS was one of the most accurate forecasters of the global financial crisis – prior to it actually taking place. It may have […]
Superforecasting Part I: becoming a better forecaster
“Beliefs are hypotheses to be tested, not treasures to be protected.” – Philip Tetlock and Dan Gardner As investors, we are all engaged in the practice of forecasting. While this realization may be offensive to some value investors who swear against making macro predictions or forecasts, it is impossible to get away from estimating the […]
Using Bayes over emotion
A friend of mine was recently traveling overseas and encountered a rather stressful 24 hours during which he thought the keys to his apartment had been stolen and he had potentially been robbed. To help calm his nerves, we stepped through a Bayesian probability analysis which showed that – despite his keys being missing – […]
Is there a case for CAPE in 2016?
Today more than any time since the GFC, droves of market commentators, sell-side strategists and well-respect fund managers are jumping on the bearish bandwagon warning of financial apocalypse, yet equity markets continue to reach new highs. One favored measure of relative valuation by which the US stock market is judged to be in a bubble […]
Did Janet tell us anything?
Each year since 1978, the Federal Reserve Bank of Kansas City has sponsored a symposium convening central bankers, finance ministers, economists and academics to discuss specific issues relating to monetary policy. This year’s meeting was held on Friday at the picturesque Jackson Hole in Wyoming. Value investors would seldom pay much attention to such meetings, historically. But […]
Will our debts keep rates low?
How to make sense of the strange new financial world in which we find ourselves? It is a seriously challenging question. There is currently around US$15 trillion of negatively yielding government bonds in the marketplace. Furthermore, some corporates have started issuing debt at negative yields (as shown below). This is unprecedented. With yields in global […]
Are your biases costing you money?
It is interesting to think about the way we think. Humans are constantly processing new information and forming conclusions believed to be true. For investors, the validity of these conclusions makes the difference between profit and loss. So it is important to be aware of the tricks that your mind plays on you. And it […]
How do your stocks rate in a low rate world?
Here’s the deal: you lend me $100. I pay you back $100 in the year 2066 with no interest in between. Does that sound fair? Would you take that deal? Well that’s what the Swiss government is currently offering – and many investors are taking it. We are living in a very strange and unprecedented […]
