Accurate forecasts, business ethics, honest politician and military justice. What do the above terms have in common?

That’s right! They are all examples of an oxymoron – A figure of speech where contradictory terms are put together. For today let us focus on the term of – accurate forecast.


Why The Interest In Accurate Forecasting?

Assuming one has 20/20 foresight and can see beyond the next curve you would be able to make a decent fortune by exercising your bet. In this case it won’t be a bet but a certainty towards riches. Man would always be tempted towards the claims of quick riches.


So Why Is Accurate Forecasting An Oxymoron?

Because in the real world, there isn’t such a thing as 20/20 foresight. Think about it, if you can “see” the future, it won’t be a forecast anymore!

I have heard of this statement in the past that goes, “One person that can always be right and always be wrong and still keep his job is the one who gives u the forecast”. Taking a weather forecaster for example, you can’t blame him if it rained when it wasn’t forecasted! On an unrelated note, it may be startling to find out that the hit rate for a weather forecaster may be relatively higher than that of a stock market forecaster!

To put it bluntly, a stock market forecaster is merely trying to predict how the masses might react in any given period.


Value In Action

There is a whole lot of noise in the market and in this age of information overload, even if we were to spend the whole day trying to filter the inflow, we wouldn’t get anywhere at all. Hence as value investors, we try to concentrate on what is important and simply ignore all the noise out there.

The next time we come across any forecasts, we have to try to take it not with a pinch but rather a ladle of salt!

Predicting the future is easy. It’s trying to figure out what’s going on now that’s hard
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All views and opinions articulated in the article were expressed in Mun Hong’s personal capacity and do not in any way represent those of his employer and other related entities. Mun Hong does not own any shares in the companies mentioned above.


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