As stated by the author Humphrey B. Neill theory, “forecasting is unnecessary and unwise. Trying to predict the unpredictable is the cause of countless losses.” To be a successful contrarian, one must have the intellectual courage to stand alone and to take positions opposite the crowd. Additionally, making predictions has become out of control mania.
Key discussion: “If you believe the predictions, you act against them to shield yourself.” Thus you help the predictions to go haywire. According to the book, The Art of Contrary Thinking, “Congressional Authority (President Council of Economic Advisers) has established forecasting bureau which is needed to issue annual reports concerning the Prediction and in the past has issued them more frequently.” Be skeptical of past trends being stretched far beyond the present. The elastic may break or snap back when least expected.
“We have seen the science of forecasting pass through various stages as this or that "theory" has come into the spotlight.” Various theories come into favor at different times like Keynes theory. Today, the “indicator” approach seems prominent. And the more prominence this or any theory receives, the less likely to work.
“Today there seems to be a leaning toward mathematics and the factors being analyzed in an engineering manner. And thus, everyone constantly is hunting for the key to the future.” The irony is that widely followed forecasts bring about their own demise. Forecasting techniques are fallible. They are subject to human Error both at the forecaster’s end and at the economical end. To forecast business, you must predict human beings, which is impossible as we know.
Conclusion: “As long as the predictions remain popular, and are so numerous, and so long as they receive notoriety through repetition in the press or in the other radio, the art of contrary opinions will rise rapidly in importance as thinking of aids.” .
Check out the book here