Where is the monsoon headed?
When will the stock markets fall?
What will be the impact of GST on business?
Who will form the government in the next elections?
Which team will win the match?
What will be Trump’s next tweet?
This is a season of gazing the crystal ball or excel sheets, which ever you prefer.
Our brains are working full time. We are using information, making assumptions and then using a little bit of probability and some intuition to arrive at our best predictions.
We may have zero control over the events or no impact from the resulting event, but we love to make them, these predictions, by whatever name you may like to call them. We waste humongous time and energy. It has an opportunity cost.
Forecasting is the art of saying what will happen, and then explaining why it didn’t.
Why do we do that?
One, we love pattern matching.
Two, we seek certainty.
Three, we want to feel smart – a top need on the Maslow’s hierarchy.
We want certainty. As contradictory as it may sound, but we hate surprises that we don’t expect.
We don’t want to be caught in a rain or a clogged street. Even with the stock market investments, we need certainty of returns.
We live in a complex world with billions of moving parts. As human beings our default nature is to know for sure what is going to happen.
And if someone comes along, who helps us make sense of the path, by peeking into the future, he is totally welcome.
Remember when you were really down? How good you felt when your mother or friend made a simple assertion to you “it is going to be fine”. It was not truly a forecast or prediction but a sense of what future was going to be. Enough!
Finally, whoever called out the previous bust or a major event, isn’t s/he a hero? It feels good to be smart.
Some predictions are required
Predictions or forecasts help us feel that we are closer to certainty.
Take a business plan, which is based on a certain state of the world and how does the business wish to be a part of it.
We plan our resources better, coordinate our time and activities and work towards desired results.
Over time, you start observing the patterns and match them better.
Usually, there are two types of predictions – the lucky and the wrong!
Predictions can be dangerous specially when done on an excel sheet just using your imagination. Or they are mindlessly relied on.
Making a foolish prediction is one thing but if you are betting a lot on your prediction, it can wipe you off, literally.
So true of startups!
Someone famously said, “No business plan survives the first contact with the customer.”
But you see, we still seek and love the smart guy who can bring us certainty.
I have been predicting that the markets will not fall and I have been horribly lucky so far. I know several investors who are waiting to prove me wrong.
So, what are the predictions you make for a living?
What results in a good prediction? Is there a recipe?
Here’s your chance: Can you make a prediction if you will join my Money Master program at a special offer? Check it out here.