By Nwaodu Lawrence Chukwuemeka
TUE, FEBRUARY 21 2017-We hope you enjoyed the holidays, but if you are like us, you have got one eye fixated on 2017 already. For those of you looking to get a jump on this new year, doing a little homework and deeper thinking — apart from just keeping up with the weekly news and white paper flow — may be just the ticket you need. As such, I am taking a break from my regular format to offer our suggestions on a few things to read, listen to and watch over the holidays and in the early part of the year. Hopefully, they will help you in your 2017 preparations.
Note: There are no commercial arrangements associated with our attached recommendations.
BOOKS:
Superforecasting: The Art and Science of Prediction –
Saying that 2016 was a dumpster fire for professional forecasters is an insult to dumpster fires. But if you had read this 2015 book on forecasting, you might not have been surprised by some of the unexpected things that occurred in 2016. Whether you’re a start-up entrepreneur, VC, M&A banker or investment manager, having a forecasting framework that enables you to rock a Brier score would be a very valuable asset. In Superforecasting, Phillip Tetlock and Dan Gardner reveal insights into the methodologies of superior forecasting by highlighting Doug Lorch, Bill Flack and Sanford Sillman. These three ‘superforecasters’ you have never heard of have outperformed intelligence community analysts by a wide margin. How do they do it? The book attempts to shed light on that question while making the overarching point that forecasting isn’t a mysterious gift. It’s the product of a systematic way of thinking.
Super forecasting: The Art and Science of Prediction: by Philip E. Tetlock, Dan Gardner. Economist Best Book of 2015.
Everyone would benefit from seeing further into the future, whether buying stocks, crafting policy, launching a new product, or simply planning the week’s meals. Unfortunately, people tend to be terrible forecasters. As Wharton professor Philip Tetlock showed in a landmark 2005 study, even experts’ predictions are only slightly better than chance. However, an important and underreported conclusion of that study was that some experts do have real foresight, and Tetlock has spent the past decade trying to figure out why. What makes some people so good? And can this talent be taught?
In Super forecasting, Tetlock and coauthor Dan Gardner offer a masterwork on prediction, drawing on decades of research and the results of a massive, government-funded forecasting tournament. The Good Judgment Project involves tens of thousands of ordinary people—including a Brooklyn filmmaker, a retired pipe installer, and a former ballroom dancer—who set out to forecast global events. Some of the volunteers have turned out to be astonishingly good. They’ve beaten other benchmarks, competitors, and prediction markets. They’ve even beaten the collective judgment of intelligence analysts with access to classified information. They are “superforecasters.”
In this groundbreaking and accessible book, Tetlock and Gardner show us how we can learn from this elite group. Weaving together stories of forecasting successes (the raid on Osama bin Laden’s compound) and failures (the Bay of Pigs) and interviews with a range of high-level decision makers, from David Petraeus to Robert Rubin, they show that good forecasting doesn’t require powerful computers or arcane methods. It involves gathering evidence from a variety of sources, thinking probabilistically, working in teams, keeping score, and being willing to admit error and change course. Superforecasting offers the first demonstrably effective way to improve our ability to predict the future—whether in business, finance, politics, international affairs, or daily life—and is destined to become a modern classic.
FinTech Innovation –
Our friend, Paolo Sironi of IBM, is an Italian based in Frankfurt who works for a major US company where he travels the world discussing how innovation is changing wealth management. As a result, his opinions are informed by a global perspective that reappears throughout his comprehensive book, FinTech Innovation. Sironi is at his best when he links new technologies to the concept of goal-based investing, which puts an individual’s personal goals and lifestyle at the center of the investment process. When done with superior tools and a solid understanding of portfolio theory, says Pironi, this approach can strike an optimal balance between risk, liquidity and investment horizon.
The War of Art –
“Most of us have two lives. The life we live, and the unlived life within us. Between the two stands resistance.” That the core point behind this insightful 2002 book by Steven Pressfield. Whether the battlefield is a start-up you are trying a build, a book you are trying to write or an addiction you are trying to kick, you are sure to encounter resistance. Pressfield urges his reader to wage war, total war, to defeat this formidable, internal enemy.
Start the year by marking “Superforecasting: The Art and Science of Prediction”
guided by the book – Superforecasting: The Art and Science of Prediction.
by Philip E. Tetlock, Dan Gardner. The Economist best book of 2015.
Everyone would benefit from seeing further into the future, whether buying stocks, crafting policy, launching a new product, or simply planning the week’s meals. Unfortunately, people tend to see forecasting as clairvoyance, best left to the experts and thereby miss out on the great benefits therein.
When it comes to forecasting, most pundits and professionals do little better than chimps with dartboards, according to Phillip Tetlock, who ought to know because he has spent a good deal of his life keeping track. Tetlock has partnered with Dan Gardner, an excellent science journalist, to write this engaging book about the 2 percent of forecasters who manage to consistently outperform their peers.
Oddly, consumers of forecasts generally do not require evidence of accuracy.
The book: Superforecasting: The Art and Science of Prediction is solid, it is an interesting read, full of interesting stories and examples. The author doesn’t prescribe a particular method – superforecasting, it appears, is more about a toolbox or set of guidelines that must be used and adapted based on the particular circumstances. At a result, at times I felt the author’s thread was being lost or scattered; however, upon reflection I realised it was part of the nature of making predictions.
Ever since mankind has grasped the concept of time, we have been trying to predict the future. Whole cottage industries have sprung up around the process of prediction. Knowing what is coming next is a need that borders on the obsessive within our culture.
But is it even possible to predict what has yet to happen? According to “Superforecasters: The Art and Science of Prediction”, the answer is yes…sort of.
Philip E. Tetlock feels a bit too polite. Sometimes it seems he is excusing wrong predictions by finding weasel words in them or interpreting them kindly instead of using the intended assertion. Just say, Thomas Friedman is a bad forecaster.
Instead of reading this book I recommend reading the books he references:
Thinking, Fast and Slow The Black Swan: The Impact of the Highly Improbable and The Signal and the Noise: Why So Many Predictions Fail – But Some Don’t
Summarising 20 years of research on forecasting accuracy conducted from 1984 through 2004, Philip Tetlock concluded “the average expert was roughly as accurate as a dart-throwing chimpanzee.” More worrisome is the inverse correlation between fame and accuracy—the more famous a forecasting expert was, the less accurate he was. This book describes what was learned as Tetlock set out to improve forecasting accuracy with the Good Judgement Project, largely in response to colossal US intelligence error
Give me a one-handed economist! All my economics say, ”On the one hand? on the other.’ People don’t like experts who are context specific and could not provide us with clear simple answers regarding complex phenomena in a probabilistic world. People don’t like if an expert sounds not 100% confident. They reason, that confidence represents skills. Experts who employ publicly acceptable phenomenon to foretell a populist view.
Social scientist Philip Tetlock talks about his multi-year experiment to measure and identify ways to improve our forecasts. A lot of his findings appear to be common sense, i.e. many forecasts are very nebulous and difficult to disprove and so we can’t really tell if we are improving, big problems can be forecast by breaking them into more manageable pieces (Fermi-izing in his terminology), our judgement is affected by various biases, etc.
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Nwaodu Lawrence Chukwuemeka (Ideas Exchange Consulting).! nwaodu.lawrence@hotmail.co.uk (07066375847).!theG&BJournal columnist
