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Jim O'Shaughnessy @jposhaughnessy
, 4 tweets, 1 min read Read on Twitter
12/ the market on 16 occasions. As Dreman dryly notes: “This meant, in effect, that when a client received professional advice about those stocks, they would underperform the market almost nine times out of ten.” Finally, many studies have shown that this is true in almost
13/ all forecasts, be they about stock prices, patients needing medical treatment, college admissions offices trying to pick who to admit–and virtually every other industry where professionals were making predictions and forecasts. And yet, even with all of this empirical
14/ data, we continue to crave forecasts and put a lot of faith in them. Why? Human nature. We abhor not knowing what might happen and crave continuity and certainty. Thus, we tend to grasp on to anything that sounds reasonable and often end up following a narrative that leads
15/ to bad outcomes. And when we see they are wrong do we learn our lesson and swear off them? Nope. We read the current forecasts with an undiminished belief that maybe *this* time, they'll be right. Here's a forecast that might be right: We'll never stop listening to forecasts
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