By definition, financial markets and their sewing circles are rife with predictions.
The bond bubble is about to burst
China will become the next superpower
Equities will NEVER regain their footing
Unfortunately, these predictions are mostly useless. Quite simply, we have no idea what’s going to happen in the future. It’s impossible to predict the future accurately over a large sample-set. It’s impossible. That goes for stock market prices, macroeconomic trends, socioeconomic trends, the weather, and how long it’s going to take you to get home from work today. There are just too many variables to accurately predict the future with any sort of reliability.
In the spirit of bashing any and all de-facto predictions, then, we turn to a Newsweek article written in 1995 by a pseudo-famous PhD astronomer-techie-pundit, Clifford Stoll. The article, entitled The Internet? Bah!, was written at just around the time when PC computing on the internet was just beginning to hit the mainstream US consumer market.
After two decades online, I’m perplexed. It’s not that I haven’t had a gas of a good time on the Internet… But today, I’m uneasy about this most trendy and oversold community. Visionaries see a future of telecommuting workers, interactive libraries and multimedia classrooms. They speak of electronic town meetings and virtual communities. Commerce and business will shift from offices and malls to networks and modems…
Baloney.
The future of the internet summed up in a word – BALONEY! This is coming from a professional on the cutting edge of internet usage (two decades of use in 1995). He’s not some media hack just firing from the hip – with a PhD in astronomy, Mr. Stoll was quite literally a part of the birth of the internet (in a broader sense of the word, a la academia).
It’s important that we give Mr. Stoll a sense of professional expertise, because it’s that very professional expertise that leads to a false sense of confidence in knowing the future (from us, for believing him, and from him, for predicting in the first place). The guy’s a computer engineer astronomer academic. If there was somebody in the room who everyone could agree could shed some light on the future of internet computing…it would be him.
You have to read the whole article to get the full flavor of his prediction. Why would ANYONE buy ANYTHING on the internet? There are no salespeople on the internet! There’s no order on the internet! (Google was founded in 1998, just 3 years down the road).
My point is this – no matter who you are, no matter how smart you are, no matter how exalted you are within your chosen field – it’s impossible to predict the future. On the other side, the same is true for the people he is arguing against, who predicted the internet would become the nexus of information and commerce that it’s grown to be. Both sides’ predictions are equal as probable outcomes. It’s quite literally a coin-flip, just with more variables. We can sit here Monday Morning Quarterbacking, and laugh at Mr. Stoll and how wrong his predictions were, etc. That’s not the point. The point is to beat into your brain that predicting the future is an impossible task.
The future is unknowable. We solve this philosophical quandary by systematically following an adaptive rule set that has been rigorously tested and can be shown to have outperformed over a long period of time. We buy what is strong and continue to hold it until it becomes weak. It really is that simple.
