[“Sabbath” is this blog’s Sunday feature that explores places where work and life meet.]
Following the Experts
The past week has been very bad for experts, especially those who make predictions. Last Sunday, the Green Bay Packers lost the New York Giants. The experts have spent most of the season calling the Packers the favorite to win the Super Bowl. The New Orleans Saints, the team that many experts said had the best chance to beat Green Bay, also lost.
Yesterday, former Speaker of the House Newt Gingrich defied the experts by winning the Republican Presidential Primary in South Carolina. A week ago, polls had him losing to Mitt Romney by margins of 5% to 20%. Gingrich won the election by 13%, and now the experts will begin to tell us what will happen in Florida in 10 days.
Who will win the Oscars? Really, who cares? We are a society obsessed with predictions, ignoring how often “experts” are wrong (Who picked the St. Louis Cardinals to win the World Series?). The same principle holds true in business and investing. Look back at the “hot” stocks that end up losing money for the investors who followed conventional wisdom. Similarly, many strong businesses have failed when they guessed wrong about market trends. The best example of such a decision might be “new” Coke, which consumers rejected, forcing the company to return to its “classic” formula.
Why are experts wrong? In his great book Black Swan, Nassim Taleb argues that it is impossible to predict the future. Too often an unexpected event will happen – a Black Swan – that will change the path of history. A Black Swan event can be good or bad – 9/11 or Steve Jobs’ Apple computer. Rather than try to do the impossible and predict such events, Taleb recommends that we prepare for them by being “robust,” being prepared to meet the change and use it to our advantage.
Experts do contribute to our understanding of the world, but we need to take their advice with a grain of salt. Ever since the financial collapse of 2008, economists, politicians, and pundits have all predicted that a new disaster is coming. They preface their forecasts with words like if and could. For example, “If another European country undergoes financial stress, the Euro could collapse as a currency, which could impact the American economy and lead it to a possible recessions.” The secret to being an expert? Hedge and qualify your predictions whenever possible.
I like Taleb’s solution. Let the future happen and deal with the unpredictable when it happens. Stay flexible and humble. Don’t mindlessly follow the crowd. The stories experts tell are attractive because they make us think we understand and can control the future. It’s a nice myth, but reality and experience show again and again that the “best laid plans of mice and men”. . . Enjoy the rest of the playoffs, the Super Bowl, as well as the political games. However, if you are going to bet, think twice before following the experts.
Big Websites Going Black
Tags: internet freedom, PIPA, SOPA, Wikipedia, Wordpress
Wikipedia and other major websites are shutting down operations tomorrow to protest two laws that will restrict freedom on the internet: SOPA and PIPA. Supporters of these bills claim that they will only control theft of intellectual property. Opponents, like Wikipedia, say they will limit online content.
Internet freedom is important to everyone who uses the web, including job seekers. We need the ability to have access to a wide variety of sources, not just those approved by the government or those large corporations that buy the votes of legislators. Three cheers for Wikipedia and the other sites that are shutting down in protest. Contact your representatives and tell them that SOPA and PIPA will limit internet freedom.
Postscript: WordPress has blocked out its front page with “censored” figures – another blow struck for Internet freedom. I will not post tomorrow. Instead, I will call the offices of Senator Durbin and Senator Kirk and tell them not to support these bad laws.