He has compiled and aggregated past forecasts for a number of popular financial metrics. The following chart illustrates how well forecasts of inflation have approximated actual inflation over the last several decades:
Next, consider forecasts of the US government 10-year bond yield:
Of course, it should be noted that these forecasts are considered in the aggregate, whereas some forecasters may be able to consistently outperform others. However, there does appear to be a lack of supporting evidence that some forecasters are clearly superior.
Sixth-century BC poet Lao Tzu remarked that "those who have knowledge don't predict" while "those who predict don't have knowledge". So if forecasts are so useless, why do we spend so much time making them and reading about them?
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