Forecast Forethought

"Personally, I'd give us one chance in three. More tea anyone?"
--Captain Marko Ramius

Professor Kostohryz reminds us of the lack of value in making predictions for the new year.

I also liked his approach to scenario analysis. He assigns a 65% chance of a self sustaining recovery and a 35% of a double dip recession. While that would seemingly tilt his financial choices toward the bullish side, he also notes that the consequences of the double dip would be drastic. As such, this is keeping him in cash till he sees the odds more in his favor.

Nice lesson in a 'weighted average' probability assessment--weighted based on the severity of being wrong.