One of the books I was assigned in my doctoral program is William H. Starbuck’s The Production of Knowledge, which I thoroughly enjoyed and highly recommend. It can be viewed as a softer criticism of the idea of predicting the future than Nassim Taleb’s The Black Swan. And while I also recommend Taleb’s book, I would encourage you even more to read Starbuck’s. I decided earlier this week that it is worthy of another read, and so I will shortly tackle it again.
Well, this is perhaps a rather long intro into an article that appeared in today’s WSJ by James K. Glassman, perhaps best known for his fabulously popular, Dow 36,000: The New Strategy for Profiting From the Coming Rise in the Stock Market, which I commented on earlier this month. As noted in that post, this book can be purchased today for a penny, though some probably would suggest that it’s still overpriced.
Carlos Lozada in a March 8, 2009 interview in The Washington Post asked Glassman “[do you] feel the need to apologize to someone who read your book, went in and got creamed?,” to which Glassman responded “Absolutely not.” Although he doesn’t apologize for his error, and perhaps shouldn’t, he at least admits that he was wrong in today’s article.
In the WSJ Glassman mentions “While history is usually the best guide to the future, it is far from perfect.” I don’t know what he bases this statement on, because I would argue that history isn’t a very good guide in many respects. This is part of Starbuck’s and Taleb’s arguments against making any prediction. Glassman is correct that the idea of the United States having a black president at this point would probably have been considered a “pipe dream,” or that the Saints would have won the Super Bowl, and on and on. But that didn’t stop him from suggesting that the Dow would achieve such a lofty level in a rather short time.
But why did the WSJ, a paper that is highly selective in who they let write articles or position papers for, include this piece by Glassman? Yes, he has held (and still holds) some lofty positions, but his ability to predict or offer advice on investing is such that he’s among the last who should be granted such privilege. Or am I mistaken? What do you think?
In spite of our poor job at predicting, people still want to hear what pundits have to say about the future. I see that Jim Rogers will speak at this year’s CFA Institute annual conference. I have read a couple of Jim’s books and find him to be highly intelligent and engaging. But I recall a prediction he made during Bill Clinton’s first term in office when spoke at the NYSSA; he said that Clinton would be the last Democratic president. Well, that was a bold prediction and he, of course, was in error.
I recall that in the Old Testament the punishment for fortune tellers is death; and while I would never encourage such an extreme response, I do think that we should be careful what we believe when we hear pundits talk about the future, even when they’re some of the brightest people around.