I have a strong (and probably unhealthy) relationship with statistics and probabilities. I see the world through a filter of what is happening and what might happen because of it. I think in percentages of likelihood. It is not always pretty.
Nate Silver of FiveThirtyEight fame is a hero of mine. He doesn’t just run numbers and make predictions, he spends considerable time and effort analyzing why predictions succeed or fail. His presidential predictions are epic and more accurate than anybody else. His book “The Signal and the Noise” is really good reading for a stats freak. He shows why weathermen are wrong so frequently and why economists have an even worse prediction record.
Richard Thaler won the Nobel Prize for Economics in 2017, the year I read his book “Misbehaving”. It is entirely based on the faulty assumptions in Keynesian Economics, such as the constant In every instance of choice the consumer will always do what is in his best interest. It simply is not true but is still an honored tenenet in Economic Theory.
Understand that Thaler is not listed as an economist. He is known as a behaviorist because he has spent his entire career debunking the assumed behavior of humans. He is really the first Economist that has brought the variables of human behavior into the equation.
So here is where this is going, I think. We have to be very cautious when we choose who we listen to. I read a lot here on Hive and I see advice ranging from sell yesterday to buy all you can today. It’s no wonder there is a lot of Fear, Uncertainty and Despair here in our little corner of heaven.
It’s not a rhetorical question. It’s the start of making an informed choice about accepting advice.
In my case, I’ll guarantee it’s not a guy publishing daily or even weekly charts to bolster his point and predictions. I’ll further guarantee it’s not that guy that says “When Bitcoin is $100,000” at the start of his prediction.
Daily (or even weekly) charts do not, repeat not show a trend. They show reactions of buyers and sellers that may know even less than the daily charts guy.
It’s not that I think BTC won’t go to $100,000, I do. I also think it will be more than a little ways in the future.
While past performances are not an indication of future success, consistent failure might be an indicator of future failure.
Do you see somebody making a prediction that intrigues you? Check them out a little and see how they’ve done in the past. Particularly watch for people that predict both sides of an issue or problem. That is done to guarantee a usable quote in the future.
Do research, learn as much as you can before you chose your Guru or one time advisor. See if they show how they came to their conclusion. It’s probably good advice to just run away from somebody that can’t (or won’t) show their work. It’s brutally important when my money is at stake.
Listen To Your Heart
Or your gut or your left big toe-where ever your common sense resides. In the end, it really is about taking responsibility for your decisions right or wrong. Know as much as you can, then trust your judgement when picking an advisor. It’ll pay huge dividends in the end.
DISCLAIMER: This is absolutely meant to be financial advice. Please treat it as such and protect yourself to the best of your ability.
All words and photographs in this post are mine. For better or worse. The photographs in this case have nothing to do with this post, are only used to break up a mountain of text and provide some attractiveness to an otherwise bleak publication.
Thanks for reading this all the way to the end. Anything can happen and often does.
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