Re: Prospects vs Forecasts.

[Clifford Poirot <cpoirot@xxxxxxxxxxx>]

How can you assess prospect without the form of
continuity that you seem to be throwing out the window
as soon as true uncertainty is recognised.  If there is
no correlation between current conditions and future conditions,
there is no reason to invest in something based on its prospects.
The lack of correlation would imply that a random guess would
have as good (and as bad) result.

My response:
This is my problem with what I might call, the strong non-ergodicity
hypothesis. I see a difference between uncertainty and the ability to use
rules of thumb.

If one examines overall returns of the stock market for the last 70 or so
years, one gets an average of about 11%. I have no guarantee that the next
70 years will be like the last 70 years, and probably some guarantees it
will not be. However, barring environmental catastrophe, nuclear war, global
meltdown into anarchy I have good reason to believe that the performance of
capitalism a whole will be more or less what it has been over the last 70
years. Thus I might reasonably guess an approximate 11% return on my stock
portfolio over the next 25 years-knowing full well that there is no
guarantee.

That said, this asessment is still better than random and rooted in
intelligent assessments about how the economy works, how technological
processes influence growth and so on.

Or as you put it:

"Now obviously the further into the future you project,
the less credence you give the projection.  At some point,
you would give no credence whatsoever, and say, "I'll
manage through to that point, and as it gets closer, I
will take another look at conditions." "

My response:
but this is very different from random guessing. It allows me to distinguish
between silly projections and sensible projections, just as I can
distinguish between a sound business idea and a Ponzi scheme.