We would all like to benefit from seeing further into the future, whether buying stocks, crafting policy, launching a new product, or simply planning the week's meals. Unfortunately, people in general tend to be terrible forecasters! As they are part of a collective thought the process. As Wharton professor Philip Tetlock showed in a landmark 2005 study, 'even experts predictions are only slightly better than chance'. However, an important and underreported conclusion of that study was that some experts do have real foresight.
Global Forecaster is a continuation of the work I started at J.P.Morgan in 1986, now bolstered with over three decades of experience . Looking back at my work at JPM, I was creating, in essence, a price based version of behavioural economics. Two of us, based in London and NY, managed to consistently forecast the markets price action, producing a better track record than the whole of the bank's research department. How could that be? Two against a whole massive department?
The Foresight of Super Forecasters
Today there is a new term to describe the phenomena of seeing ahead ot time; Superforecasting, This is described well in a relatively new book about The Art and Science of Prediction by Philip Tetlock. If you're wondering if there's any way to predict an election; an economic crisis or even a war, Tetlock has an answer. He uses psychology and political science and a lot of common sense. He taps into what's often called 'the wisdom of crowds'. This is a fascinating book and it will make you think about the effective processes of the mind that lead to the best predictions.
Superforecasting, draws on decades of research and the results of a massive, government-funded forecasting tournament. The Good Judgment Project involved tens of thousands of ordinary people—including a Brooklyn filmmaker, a retired pipe installer, and a former ballroom dancer—who set out to forecast global events. Some of the volunteers have turned out to be astonishingly good. They've beaten other benchmarks, competitors, and prediction markets. They've even beaten the collective judgment of intelligence analysts with access to classified information. They are "superforecasters". The treasure trove of data coming from The Good Judgment Project, showed that accurately selected amateur forecasters (and the confidence they had in their forecasts) were often more accurately tuned than so-called recognized institutional experts.
So What makes some people so good at Forecasting? And can this talent be taught?
Tetlocks work is useful as it highlights the manifestation of super forecasters, but I do not believe it explains how and why they are successful. Indeed I have studied the process in market risk-takers for over three decades and would make the following conclusions:
1. Large organizations are disadvantaged in predicting the future as they are substantial enough to have their own collective behavioural pattern that is then linked to the phenomena they are predicting. This negates any chance of creating a nonlinear forecast. The larger the organisation the more left-brained the process will become creating further limitations.
2. In contrast Superforecasters who are effective are all right-brained, individualistic mavericks who are separate from the collective mind and thus see the larger patterns and connection, who are them selves part of the collective process.
3. A further subset of right brained is dislexia.The negative manifestations of which are challenges with reading writing and spelling giving them the appearance in conventional education as being slow learners.However as GCHQ, one of Britain's largest spy organisations has recently announced dyslexics with high IQs are often equipped with skills and ways of thinking described as a natural difference by the head of the agency. They are able to simplify complex processes and problems and make connections between different concepts that the majorly would not see. Allowing them to see and understand the bigger picture and break codes!.Lastly they are really good at communicating with the wider world and within teams which is critical if new ideas are to be disseminated.
4. However, it is not good enough to just have the genetical capabilities, as that is only the hardware aspect. In addition superforecasters need to have the right software and to have also developed their left-brained functions to create structure and order from patterns which can be discerned. I call this the 'learn to learn' algorithm. It often appears slow to learn in youth, but it keeps learning into old age building a complex three-dimensional hologram in which information is stored in a moving dynamic algorithm that processes information and makes links that others do not make.
When these two functions in points two and three are combined the conditions are set for super forecasting.
Thus when I am asked why I have been able to successfully predict moves and events that others have not en masse, I ascribe my process to these elements. It is validating to find that the abilities that have defined my life as a super forecaster are defined and not unique as now identified in the open press.
Global Forecaster Objectives
My three decades of work have been focussed in the art of super forecasting, but I have also sought to go much further than the application of good judgment. In addition to having the genetic predispositions (including dyslexia )that I mention above, I have tried to systemise my thought processes into a code of history that can be shared with anyone and facilitates a new way of thinking for human organisations. I hope that, as readers of my Murrinations, you will not only benefit from my approach with improved real-world outcomes but also share it with those around you so it becomes more generally recognised as a tool for decision making and better understanding the human world.
Whilst Murrination’s are available to the general public to hopefully increase general awareness of critical issues. My Financial Market Analysis and Advisory service are aimed at Senior Executives and risk-takers to help them navigate the turbulent waters of our modern world successfully.