Dear Reader,

I apologise for the more technical nature of tonight's post and the lateness.  I was stuck near Norwich for a large part of my day.  I am actually a bit of a technical geek but try not to bore people with data.

I want to talk about forecasting today .  I am definitely a chartist by nature..  I used to look at long term charts on Bloomberg all the time and try and work out trends for price movement across every asset class.  I was right 80% of the time but the times I was wrong I was getting carried out completely.  My biggest issue was I kept seeing cats in the charts.

I have tried over time to try and create my own specific macro relationships between Euro government spreads or commodities but fundamentally although being right on my random variables 80% of the time  has always ended up with the 20% that didn't fit my models making me lose my shirt.  

My favourite living economist Nassim Taleb produced a youtube video trying to briefly explain that charting is basically bullshit. You are right until you are not and then the costs completely outweigh the benefit.  If you don't follow him I suggest you do.. He is one of the frontiersmen for my industry and an exceptional thinker.

https://www.youtube.com/watch?v=hRwimmE2wEk

I highly recommend watching it.  It is titled 

Explaining both the XIV trade and why forecasting is BS

The Holy Grail for Financial Advisory would be the ability to predict the future. As 'Mr Black Swan' points out that is an impossibility..or in his words 'BS'.  You will note I nicked the term from him and use it to describe Trump as the 'orange Swan'.

Fundamentally he seems to unintentionally back up my concept of Active Macro and the need to be agile in these markets. His key point is you need to make decisons that make sense and that he has never met a rich forecaster.  I am happy to talk to anyone about my macro views.  I would say that whatever charts and forward projections anyone puts in front of you are as Nassim says basically unreliable (or more bluntly BS)

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On that happy note and trying not to bore you to death with Non linear Pay off functions I wish you a great weekend.

Don.