Making Predictions

It's tough to make predictions, especially about the future; and if your investment approach relies on making predictions, then your returns are only as good as your forecasts. I'd throw in timing as well. History shows that's a tough way to make a buck. The so-called 'experts' get it right less than 1-in-3, and we all underestimate the impact of outliers, or extreme events that few predict. If you predicted the market perfectly from 2003 to 2008, it would have been for nothing if you failed to predict the subsequent sell-off.

Listen to the experts, because you can learn a lot from their knowledge about what they specialize in; however, be wary of their predictions because by specializing in one field, experts may overlook exogenous factors.

GB

Brazilian Bikini Wax Indicator

I have to share the following from today's edition of 'Diary of a Mad Hedge Fund Trader':

There is no end to which they will go to understand the future direction of the world economy. Now apparently, the price of Brazilian bikini waxes is going through the roof; no joke, the Brazilian government includes this strategic activity in its basket of consumer services to calculate inflation. It is one of the few measures they track which can't be clouded through altering of its quantity or quality. The point is that inflation is worsening, and not only in Brazil, but in China, India, and Vietnam; so expect more tightening.

They conclude that an economic indicator in the hand is worth two in the bush.

GB