Posted on 12/15/2014 8:32:37 AM PST by thackney
Paul Krugman made the point recently that the only stock market forecasters who correctly predicted a market drop were those who always predicted falling markets. This is known as the ‘stopped watch’ approach to forecasting: constantly make one prediction and eventually the market will move in that direction. Especially for oil prices, which are highly variable, this works wonders to the point where the great Adam Sieminski often joked that you should predict the price or the date, but not both.
This is reminiscent of Napoleon’s adage, that it’s better to have lucky generals than smart ones. He didn’t note that you can only identify lucky after the fact. Asking forecasters to flip coins and then believing the one that always gets heads is not an effective strategy.
In Houston a couple of years ago, I was tweaked by my host for the prediction on an earlier trip that prices would revert to $30 a barrel within a year or so, and I responded with a slide from that trip and noted that almost everything I predicted was wrong, except that Iraqi political stability seemed unlikely. Pure genius, that last one.
For the past several years, I have been suggesting that, without major improvements in the geopolitical situation, long-term oil prices should be about $60 a barrel. For this, I was derided by a number of observers, including the late Christophe de Margeri, CEO of Total, and I have been persistent the lowest of the ‘major’ forecasters, as seen in the DOE survey published earlier this year.
So am I a stopped watch? Or clever?
Well, since I haven’t argued for constantly-falling prices but a near-term plateau around $70 (whoops)...
(Excerpt) Read more at forbes.com ...
Tedious and smug by my reading.
Sorry, but Krugman writing about economics is akin to Gore writing about science.
But the analysts who were wrong about the price of oil don’t have Nobel Prizes in Economics like Paul Krugman does.
On the other hand, Nobel Economist Krugman was completely wrong in predicting that Obama’s $800-billion stimulus in 2009 would soon return the economy to prosperity.
This is a case of a big, arrogant pot covered with ‘’Nobel Prize’’ logos calling thousands of plain little kettles black. Disgusting.
When I read a column that contains this gobbly-gook “800 tb/d,”, I know it is not written by someone who know much about the oil industry.
Sorry, not worth reading on.
This is a joke among professional forecasters. "Always give them a date and a number, but never both in the same forecast."
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