Right + Early = Wrong and in denial

The New York Times had a fawning interview with Jeremy Grantham, describing him as “right but early.” If you tell me it will rain tomorrow, and it doesn’t but it rains next week, you were wrong. If you claim you were just early, you are in denial about being wrong.

It is possible to make a useful prediction when you are uncertain of the timing. I might say, for example, that commodity prices are in a bubble and will decline to half their current values sometime in the next five years. That could be right or wrong. But if I say merely that commodity prices will decline someday, I will either be proven right or the issue will still be open. I cannot be proven wrong, so the prediction has no meaning.

People with poor risk intelligence seize on current trends and extrapolate them to absurd levels. They get a lot of publicity for this. Other people argue against them, pointing to signs that the trend is already slowing, that it generates countervailing forces and that in any case it has to hit some limits.

What happens next? Either the trend does accelerate to cause some disaster, proving the prophet of doom correct. Or the trend slowly and quietly slows and reverses, in which case people never think to credit the skeptic with a victory. If they think about it later, they remember the trend and the guy who postdicted it, and misremember the order of events so they think he was right. The skeptic is remembered as a guy who denies all possibility of disaster and confused with people who either don’t care about disaster or profit from them.

Reputation tends to go to lucky fools and doomsayers who never remember being wrong (and therefore never learn).

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