The World Didn't End: The Next Monumentally Wrong Prediction
It's now after 11:11 a.m. GMT on Dec. 21, 2012 -- and I feel fine.
The failed Mayan-calendar doomsday prediction reminds me of a minor event in my minor life.
As a kid, I tagged along with my dad, a physician, to a conference on HIV/AIDS. It was the late 1980s, so the epidemic wasn't far removed from when the Centers for Disease Control and Prevention officially recognized it in 1981. Being a Lisa Simpson-like kid, I tried to pay attention and pretend I knew what people were talking about. Most of medical jargon went over my head, but one line stuck with me. One of the researchers from a leading university ventured that HIV/AIDS would be cured in 10 years.
The prediction was comforting to a child, but telling to an adult.
Earlier this year, more than 20 years after that conference, a different expert (the chief of the Joint United Nations Program on HIV/AIDS) had this to say to The Wall Street Journal: "A cure for AIDS could be found in 10 years."
The reasons for going out on a limb and making a bold, long-term prediction are many. The downsides are, saddeningly, few.
Coming from an expert on AIDS, doesn't "10 years" sound more learned than "I have no clue"? Doesn't it make getting research money easier if there's an end in sight? If you're an expert at a get-together, don't you want to weigh in when some audacious amateurs are getting all the attention with their brazen shots in the dark?
The professional and social benefits are immediate. The downsides? They won't come for 10 whole years -- if anyone remembers your prediction. And if they do? The same reasons you're wrong can conveniently be called upon as reasons no one could have predicted it in the first place.
Perhaps more troubling, you don't need to make predictions too far into the future to reap the benefits. Our ever-shortening attention spans have moved us to bolder and quicker analysis, where Twitter is our top news outlet. A day's worth of shouting matches on ESPN can surely net 100 predictions that eventually prove wrong. I'll take the over on 100 if you're watching a day of CNBC. You'd probably come close to reaching the quota while watching a broadcast of Jim Cramer's Mad Money.
When the volume of predictions reaches such epic proportions, prognosticators are bound to be right sometimes. As with those stock schemes where you call half the phone book and say the stock's going up and then call the other half and say it's going down, there are bound to be some great calls with which to gloss over the bad ones.
Why not take some stabs when one bold call can make your entire career?
Ask Meredith Whitney, the Wall Street analyst who, in October 2007, called the eventual Citigroup meltdown. She went from unknown to financial-crisis media darling. Later, in 2010, she went on 60 Minutes and made a 12-month call for massive defaults in municipal bonds. She said: "You could see 50 sizable defaults. Fifty to 100 sizable defaults. More. This will amount to hundreds of billions of dollars' worth of defaults."
That hasn't quite panned out -- but no matter. Recently, she has come out as newly bullish on banks. Regardless of whether she ends up being right this time (or the next time, or the time after that), her bold call on Citigroup will keep her relevant in the financial press.
The correct prediction makes the headlines, while the mea culpa (if there is one) makes the footnotes. More the better when the headlines appear today and the footnotes come decades hence.
With that in mind, will the U.S. be basically energy-independent by 2030, as BP predicts? Will China and India be the world's two largest economies in 2050, as consultancy PwC predicts? Will the U.S.'s debt-to-GDP ratio will be well more than 1,000% by 2080, as the IMF predicts? Will the world's population be at 10.1 billion in the year 2100, as the UN predicts?
If you believe Nobel Prize-winning psychologist Daniel Kahneman, as well as oodles of research on the prediction capabilities of experts, the honest answer is, "No one has a clue."
The next time you see me at a party, let me tell you in advance that I don't know how bad it would be if we went over the fiscal cliff. I don't know whether Apple will beat earnings estimates next quarter. And I don't know what the stock market's going to do in 2013.
But that's all right.
It's not the end of the world.
The article The World Didn't End: The Next Monumentally Wrong Prediction originally appeared on Fool.com.Anand Chokkavelu, CFA owns shares of Apple, BP, and Citigroup, as well as Citigroup warrants. The Motley Fool owns shares of Apple and Citigroup. Motley Fool newsletter services recommend Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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