Today we continue our search for clarity in the muddy waters of economics. We want to know what will happen tomorrow…today. Moreover, we want to consider how to use our estimations of the future to our advantage.
One way to go about it is to hold a licked index finger up to the wind to see which direction things are blowing. Headwinds are bad. Tailwinds are good. Another obvious way is to look to the past and project out into the future.
Neither of these techniques will do much good for predicting the unexpected – nonlinear – occurrences. Asset diversification and strategic guesstimations are paramount for managing risk and targeting rare opportunities when things go haywire. Based on what our gut tells us, once again, things are about to go haywire.
In fact, economic data reports already have gone haywire. One says the economy is improving. Another says the economy is stagnating.
Which one is right? Which one is wrong? Here’s an example of what we mean… Continue reading
