What are the probabilities of any eventuality, event or condition? The easy answer is – who knows? The harder answer is chock full of statistics, data, collection, analysis and compilation. And while we can give gut responses to any such questions, our guts are biased, sometimes severely. But in lieu of actually doing any extended work.. we can guess.
So what are the probabilities of the following – guessed?
• FED tapering?
• Banks increasing lending?
• Interest rates rising?
• Inflation increasing?
• Planet warming?
• Extreme weather increasing?
• Energy dwindling?
• Global calamity striking?
Now, what’s missing from these propositions is a critical aspect to forecasting – time. Sure calamity will strike the globe – some time. But this forecast is useless. We need to frame the estimates by time. Reviewing each of the above again but putting a six month time frame around them how might the probabilities change? It is these numbers that we might be able to use to assist us in our future planing. The time horizon of the prediction of life affecting events is critical to planning. So, 6 months from now?
• FED tapering? 20%…
• Banks increasing lending? 40%…
• Interest rates rising? 30%…
• Inflation increasing? 50%…
• Planet warming? 60%…
• Extreme weather increasing? 55%…
• Energy dwindling? 5%…
• Global calamity striking? 1%…
If we use such numbers, they’re just guess you realize, can we then predict the outcome of things like the price of the DOW, gold, treasuries, mortgage rates, rice, used cars, milk, etc.?
Is it better to just throw a dart at a guess or is it better to try and create a generally rational framing system to help understand the probabilities of life changing events?
Anonymole - apocryphal agitators 