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Financial Predictions: Why you should ignore them

Posted June 3, 2008

J. Christoph Amberger

The world was supposed to be out of oil by 1952, natural gas was to have run out by 1984, gold by 1981. And what happened to the ozone shield and global cooling? Their lousy track record makes your local weatherman look like a genius. So why listen to scientist and resource forecasters at all?

By J. Christoph Amberger, TodaysFinancialNews

Baltimore — (TFN): The following was taken from the transcript of this week’s Amberger’s Smackdown:

In 1939, the U.S. Department of the Interior predicted that American oil supplies would last only until 1952. In 1974, M. King Hubbert projected that global peak oil would occur in 1995.

Just ten years ago, Saudi Arabia’s late King Abdulla told his subjects that “The oil boom is over and will not return.”

The seventies were a great time for prophesies…

Watch this Amberger’s Smackdown video.

In 1974, the U.S. Geological Survey warned that only a 10-year supply of natural gas remained in the United States. Today, the American Gas Association believes there’s enough to last 1,000 to 2,500 years, not counting the methane emanating from the campaign promises of presidential candidates.

In 1972, the Club of Rome forecast that  the world would run out of gold by 1981. The last mercury and silver were supposed to be mined in 1985, tin was supposed to be out by 1987 and oil, copper, lead and natural gas by 1992.

And that the world’s human population would be decimated by a coming ice age and the dissolution of the ozone shield.

The same happened with real estate in the 1970s, in the late 1980s, and in from 2002 to 2005. Here, too, the sky was the limit as price projections were concerned: After all, the good Lord wasn’t makin’ any more.

The problem is that while the good Lord may not be looking to expanding his work week creating more real estate, developers were quite happy to do so. By virtue of a miracle called subdivision, they created so much new real estate that they’re still sitting on unsold inventories.

Tired of reading? Watch the video.

In mining and resources, the process of feeding the multitudes involves improvements in exploration and increased efficiency, as recent discoveries in Africa, South America, and off the coast of Asia have shown.

Only the modern manufacturers of climate change predictions seem to have been circumspect enough to develop a flexible framework that allows them to predict hot and cold, more hurricanes and less hurricanes, tundra and tropical rain forests based on the same sets of data and get away with it.

Their lousy track record makes your local weatherman look like a genius. And still, based on popular junk science and the autoerotic arithmetic of statisticians, markets go back and forth between fear and greed, feeding frenzy and panicked exodus.

Standing at the threshold of a new political paradigm that greedily feeds off environmental doomsday scenarios and the scientific “consensus” du jour to define public policy, we may be well served remembering the accuracy of the predictive track record—and maintaining healthy scepticism toward the unison nodding of the masses.

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Posted by J. Christoph Amberger · Filed Under Featured Video, Oil and Energy, Videos 

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