Incorrect Predictions

Predictions Are Hard, Especially About The Future!

Exhibit A: The World Is Going To Run Out Of Oil Anytime

Peak oil was a dumb theory that ignored the basic laws of supply and demand:

Source: Wendover Productions (at 5:30)

This website sums up the fallacy nicely:

For decades we have been hearing from the experts that worldwide oil production is in terminal decline. The first prediction of "peak oil" in the 50s was accurate only for US reserves in the lower 48 states. However, the theory was incorrectly extended to world reserves, and the "peak oil" experts have gotten it wrong ever since. Improvements in technology allow access to reserves unreachable 40 years ago. Proven worldwide reserves have actually increased since the prediction was first made, currently at 1.2 trillion barrels. Estimates of total worldwide reserves range from 3.7 to 4.5 trillion barrels, enough to last for 122-140 years at current consumption rates. The reserves of the Athabasca Oil Sands of Alberta reportedly hold over 180 billion barrels. The oil shale of the western US's Green River Basin is said to contain over 1 trillion barrels of oil (not even counted as part of worldwide reserves) if the political will exists to extract it. It is simply more expensive to extract oil from shale but the technology exists. Oil shale yields a 3:1 return on the energy needed to extract it compared to a 10:1 return for most oil fields. Compared to the paltry 1.3 to 1 return on ethanol production, extraction from oil shale is a comparative energy bargain.

Source: https://humanscience.fandom.com/wiki/Worst_Predictions

Exhibit B: Stock Market Predictions

The record for Wall Street prognosticators is abysmal:

[Researchers] scrutinized two thousand predictions by security analysts. What it showed was that these brokerage-house analysts predicted nothing—a naive forecast made by someone who takes the figures from one period as predictors of the next would not do markedly worse.

Source: Nassim Nicholas Taleb. The black swan: The impact of the highly improbable. Vol. 2. Random house, 2007. [B188]

Take For Example, The Year 2002: These market predictions were published in a leading newspaper on 27-Nov-01. They represent the upper and lower bound of analyst sentiment before the year began.

There is no bigger clown and tool than Jim Cramer on CNBC, (but he isn't the only one whose chronically wrong predictions have led to fame rather than ridicule):

Jim Cramer of The Street published an article in February 2000 criticising ‘troglodyte value managers’ for insisting that the price-to-earnings ratio was still useful in the new economy, accusing them of ‘making something psychological into something scientific, and that is WRONG!’ Kevin Hassett and James Glassman published a book entitled Dow 36,000, arguing that the Dow Jones Index, then at around 10,000, would quickly rise to 36,000 (it peaked at around 12,000 before falling below 8,000 in 2002). It is striking how little effect the failure of these predictions had on their careers: Cramer got his own successful TV show on CNBC, and Hassett later became the head of President Trump’s Council of Economic Advisers.

Source: William Quinn and John D. Turner. Boom and bust: A global history of financial bubbles. Cambridge University Press, 2020. [B214]

The most ill-timed Wall Street predictions of all times may have been uttered before the market opened for Black Monday, in October 1987:

[Black] Monday’s “Abreast of the Market” column in The Wall Street Journal suggested that Friday’s bloodletting might have been the selling climax that many technical analysts believe signals the beginning of a bull market. One said that “the peak of intensity of selling pressure has exhausted itself” and another said “if we haven’t seen the bottom, we’re probably very close.”

Source: Gary Smith. Standard Deviations: Flawed Assumptions, Tortured Data, and Other Ways to Lie with Statistics. United States, Harry N. Abrams, 2015. [B038]

Or consider the just plain unlucky:

[There was a] bank analyst who enthusiastically recommended buying Lehman Brothers shares days before it went bust.

Source: Spencer Jakab. Heads I Win, Tails I Win: Why Smart Investors Fail and How to Tilt the Odds in Your Favour. Penguin, 2016. [B171]

Even people that appear right are usually full of it:

Possibly the most famous financial prognostication ever was made on September 5, 1929, by Roger Babson, a well-known research provider who foresaw a “crash” in stock prices. [...] What many forget is that Babson was extremely bearish as early as 1926 when stocks still had tremendous gains ahead of them, and he repeated his prediction of a crash many times. Then in 1931—far too early—he called for a recovery, ensuring steep losses for any who followed him. [He] later funded research to discover an antigravity device.

The story of Elaine Garzarelli is also fascinating:

There was one strategist, Elaine Garzarelli, who actually predicted [October 1987 stock market crash] through some nifty analysis, parlaying it into a career as the best-paid strategist on Wall Street. [...] The Dow would go on to have its largest-ever percentage drop days later, and BusinessWeek magazine dubbed it the “call of the century.” [...] But William A. Sherden, an expert on experts, says otherwise. He tracked down several of her verifiable predictions between 1987 and 1996 and found only 38 percent to be accurate. More damningly, a mutual fund that Garzarelli ran somehow lagged the market for five out of six years that it was in business, barely edging out the S&P 500 in the winning one.

Source: Spencer Jakab. Heads I Win, Tails I Win: Why Smart Investors Fail and How to Tilt the Odds in Your Favour. Penguin, 2016. [B171]

Not to pick on Garzarelli, but:

Then there was Elaine Garzarelli, a hotshot young analyst at Shearson Lehman Brothers who became an instant star after she predicted the Black Monday stock market crash of 1987. She went on to make regular appearances as a commentator on television and even starred in a commercial for pantyhose. Her bosses were so eager to believe that they had found a once-in­ a-lifetime genius, they handed her control of a giant mutual fund. A few years later, they had to fire her. She'd lost untold millions. In his book The Fortune Sellers, William A. Sherden analyzed her performance during the decade following the crash and found that she had correctly predicted the market all of 38 percent of the time. As Sherden pointed out, for all of her supposedly sophisticated analysis and widely acclaimed acumen, Garzarelli would have made better forecasts if she'd just flipped a coin. She may have called the crash of '87 and she may have been a charming guest on talk shows, but like so many other stock market celebrities, her actual investment record was abysmal.

Source: Scott Fearon and Jesse Powell. Dead Companies Walking: How a Hedge Fund Manager Finds Opportunity in Unexpected Places. Macmillan, 2015. [B018]

Exhibit C: Quotable Notables

"Well-informed people know it is impossible to transmit the voice over wires and that were it possible to do so, the thing would be of no practical value".

- Boston Post in 1865².

"When the Paris Exhibition closes, electric light will close with it and no more will be heard of it."

- Erasmus Wilson, professor at Oxford University. in 1878⁶.

"It doesn't matter what he does, he will never amount to anything."

- Albert Einstein's teacher to his father, 1895⁸.

"The ordinary 'horseless carriage' is at present a luxury for the wealthy; and although its price will probably fall in the future, it will never, of course, come into as common use as the bicycle".

- Literary Digest in 1899².

"Taking the best left-handed pitcher in baseball and converting him into a right fielder is one of the dumbest things I ever heard".

- Tris Speaker, baseball expert, talking about Babe Ruth in 1919².

"What can be more palpably absurd than the prospect held out of locomotives traveling twice as fast as stagecoaches?"

- The Quarterly Review in 1925².

"Rail travel at high speeds is not possible because passengers, unable to breathe, would die of asphyxia".

- Dionysius Lardner, Professor of Natural Philosophy and Astronomy at University College, London, and author of The Steam Engine Explained and Illustrated (1930)².

"A rocket will never leave Earth’s atmosphere."

- Editors at the New York Times in 1936⁶.

"TV will never be a serious competitor for radio because people must sit and keep their eyes glued on a screen; the average American family hasn’t time for it."

- New York Times editorial, 1939⁹.

"The Americans are good about making fancy cars and refrigerators, but that doesn’t mean they are any good at making aircraft. They are bluffing. They are excellent at bluffing".

- Hermann Goering, Commander-in-Chief of the Luftwaffe, 1942².

"Nuclear powered vacuum cleaners will probably be a reality within 10 years"

- Alex Lewyt, president of the Lewyt Vacuum Cleaner Company, in 1955¹⁰.

“It’ll be gone by June.”

- Variety Magazine (referring to Rock n’ Roll music) in 1955⁶.

"I have traveled the length and breadth of this country and talked with the best people, and I can assure you that data processing is a fad that won’t last out the year".

- Editor, Prentice Hall, 1957⁵.

"With over 50 foreign cars already on sale here, the Japanese auto industry isn’t likely to carve out a big slice of the U.S. market."

- Business Week, 1958⁹.

"Remote shopping, while entirely feasible, will flop."

- TIME Magazine, 1966⁵.

Exhibit D: Malthusianism

"In the 1970s and 1980s hundreds of millions of people will starve to death in spite of any crash programs embarked upon now. At this late date nothing can prevent a substantial increase in the world death rate."

- The Population Bomb, by Paul Ehrlich (who is also quoted as saying in 1970 that "The death rate will increase until at least 100-200 million people per year will be starving to death during the next ten years").

Obviously, Ehrlich wasn't the first to float this dubious theory:

Thomas Malthus famously predicted a dim future for humankind because he believed that as society grew richer, it would continuously squander those gains through population growth—having more children. [...] As Paul Krugman has pointed out, for fifty-five of the last fifty-seven centuries, Malthus was right. The world population grew, but the human condition did not change significantly. [...] Only with the advent of the Industrial Revolution did people begin to grow steadily richer.

Source: Charles Wheelan. Naked Economics: Undressing the Dismal Science. WW Norton & Company, 2010. [B047]

Exhibit E: Futurology

Geniuses can get it painfully wrong too:

In the 1950s, Isaac Asimov, one of the greatest and most creative science fiction writers of all time, wrote the Foundation trilogy, a series of novels set many thousands of years in the future. In those books, the men commute to work in offices every day, and the women stay home. Within only a few decades, that vision of the distant future was already a thing of the past. [...] It illustrates an almost universal limitation of human thought: our creativity is constrained by conventional thinking that arises from beliefs we can’t shake, or never even think of questioning.

Source: Leonard Mlodinow. The upright thinkers: the human journey from living in trees to understanding the cosmos. 2016. [B143]

Sousa was out to lunch with this gem:

In 1906, John Philip Sousa predicted that the invention of the phonograph and records would obliterate song composition and music education in America. “These talking machines are going to ruin the artistic development of music in this country,” he wrote to the United States Congress. “The vocal cord will be eliminated by a process of evolution, as was the tail of man when he came from the ape.”

Source: Thompson, Derek. Hit Makers: How to Succeed in an Age of Distraction. United Kingdom, Penguin Publishing Group, 2017. [B055]

If only this one had turned out as predicted:

"Herman Kahn's 1967 book entitled The Year 2000 predicted a 30-hour workweek – with 13 weeks of vacation – would be the norm. He also foresaw a world with underwater cities and housecleaning robots".

Source: Paul Krugman, Why Most Economists' Predictions Are Wrong, Red Herring Magazine, June 1998. (a scan can be found here)

Then there are the charlatans:

The reputable Journal of Portfolio Management [...] claimed in 1982 that [Joseph] Granville’s “algorithm” had some predictive value. [...] Two of Granville’s predictions failed to pan out—a massive earthquake in Los Angeles in April 1981 and his winning the Nobel Prize in Economics.

Source: Spencer Jakab. Heads I Win, Tails I Win: Why Smart Investors Fail and How to Tilt the Odds in Your Favour. Penguin, 2016. [B171]

When I was a kid, a guy named Joe Granville was famous for giving his presentations with a parrot on his shoulder. [He] made [a] fortune selling newsletters and speaking at conferences. Granville once declared that he could use his system to predict earthquakes. He even named a time and date when Los Angeles would break off into the Pacific Ocean.

Source: Scott Fearon and Jesse Powell. Dead Companies Walking: How a Hedge Fund Manager Finds Opportunity in Unexpected Places. Macmillan, 2015. [B018]

In the 70s, meteorologists were of the nearly unanimous view (according to Newsweek, April 28, 1975) that the cooling earth would "reduce agricultural productivity for the rest of the century…the resulting famines could be catastrophic." A 30-year cooling trend that started in the 1940s generated great concern among climatologists. We would need to adapt to a colder world, they cautioned. Growing seasons will shorten by weeks and decrease agricultural productivity. Yet the cooling trend that was noted by the Experts in the 70s occurred despite rising CO2 levels.

Source: https://humanscience.fandom.com/wiki/Worst_Predictions

Internet 'may be just a passing fad as millions give up on it'

Source: Daily Mail, from https://www.webbedfeet.uk/news/internet-a-passing-fad

PlayStation: How long does it have? / Dreamcast: Can it be stopped?

Source: Reddit, from August 1998

Amazon.bomb (1999)

Source: Twitter (posted by Jeff Bezos himself, albeit 22 years later and several billions dollars richer). From NDTV.

Can Tiny Wal-Mart Survive Against the Big Guys?

Source: https://www.ebaumsworld.com/pictures/30-posts-that-did-not-age-well/86268747/

Wood Bats Are Doomed

Source: Sports Illustrated, 1989. From https://www.amazon.com/Sports-Illustrated-July-1989-Doomed/dp/B004V4GQZO

Exhibit H: Y2 Bug

“Y2K is a crisis without precedent in human history”

- Edmund DeJesus, editor of Byte magazine, in 1998.

Exhibit I: Human Self-Interest & Delusions

"Simply stated, there is no doubt that Saddam Hussein now has weapons of mass destruction. There is no doubt that he is amassing them to use against our friends, against our allies and against us".

- Vice President Dick Cheney (speech in Nashville, 2002)².

"The idea that it’s going to be a long, long, long battle of some kind I think is belied by the fact of what happened in 1990. Five days or five weeks or five months, but it certainly isn’t going to last any longer than that".

- Secretary of Defense Donald Rumsfeld (2002)².

"It is unknowable how long that conflict will last. It could last six days, six weeks. I doubt six months".

- Secretary of Defense Donald Rumsfeld (2003)².

When it comes to war, models are especially easy to fudge:

Robert McNamara, the US Secretary of Defense, applied decision sciences to the Vietnam War. [...] The models predicted an overwhelming US victory.

Source: Satyajit Das. Traders, guns and money. Pearson UK, 2020. [B177]

Source: Reddit from https://www.upi.com/Archives/1977/12/07/Video-games-just-a-passing-fad-top-toy-company-executive-says/9001549038254/

This one is a bit random, but is beyond incorrect:

"James Cameron's Avatar 2 and 3 to hit screens in December 2014 and 2015"

- The Guardian in 2011.

Robots (and maybe AI too) have always been overhyped:

A company called The Robot Store began manufacturing and selling humanoid robots in 1983 [...] The company’s president predicted that between 10% and 20% of American households would own robots within two years. In fact, these devices were practically useless.

Source: Robert J. Shiller. Narrative economics: How stories go viral and drive major economic events. Princeton University Press, 2019. [B118]

Of course, CEOs have to put on a brave face to launch risky ventures:

"We are on a tear to be the undisputed winner in China".

- Meg Whitman, eBay CEO on 10 February, 2005 (in December 2006, eBay announced it would close its operations in China)⁴.

This one might be the funniest:

In an example of corporate arrogance, after the first moon landing the now-defunct airline Pan Am took advance bookings for round-trips between earth and the moon.

Source: Nassim Nicholas Taleb. The black swan: The impact of the highly improbable. Vol. 2. Random house, 2007. [B188]

By the way, Taleb also reminds us of the Segway, "an electric scooter that, it was prophesized, would change the morphology of cities".

Exhibit J: Inaccurate Polls & Experts

The failure to predict Trump's victory and Brexit's win prove that pollsters often contact the wrong people to carry out their surveys (or that portion of the electorate hang up more often when cold called):

With eight months to go before the Republican National Convention, Trump’s [...] odds of becoming the Republican nominee were only 6 percent according to Nate Silver.

Source: Adam Grant. Think Again: The Power of Knowing what You Don't Know. Viking, 2021. [B141]

And it's not just polls:

Tetlock studied the predictions of almost three hundred experts: prominent journalists, respected academics, and high-level advisers to national leaders. [His] key finding was that in their predictions about major political events, the supposed experts are stunningly unimpressive.

Source: Leonard Mlodinow. The drunkard's walk: How randomness rules our lives. Vintage, 2009. [B142]

Facebook will lose 80% of users by 2017, say Princeton researchers

"Forecast of social network's impending doom comes from comparing its growth curve to that of an infectious disease".

Source: The Guardian

Flying Machines Still One Million To Ten Million Years Away

Note: This articles was published on December 8, 1903. The Orville Brothers took off on December 17, or 9 days later. Not exactly a million years!

Source: NYT, from bigthink.com

Exhibit K: Fearmongering News Stories

Sometimes, the media works itself up in a tizzy over the latest scare:

Consider, for example, the early, alarmist predictions about the future of “crack babies.” [...] Some physicians warned that crack babies had suffered irreparable biological harm, that they would continue to suffer a variety of medical, psychological, and behavioral problems, that many would be permanently retarded, that they would require special education services when they reached school age, and that they would be a perpetual drain on society’s social services. Advocates warned that there might be 375,000 crack babies born each year, and that they might cost society—here estimates varied a good deal— $500 million or $3 billion or $20 billion annually. [...] However, as time passed and the crack babies grew older, it became obvious that this costly legacy had been exaggerated. [...] Later studies placed the annual number of births at 30,000 to 50,000—roughly one-tenth the earlier estimate. Second, crack babies did not exhibit the kinds of unique, permanent damage that had been predicted. [...] Children born addicted to crack did not have more severe problems than other, nonaddicted children born in similar circumstances. [...] The early projections had been based on inaccurate assumptions.

Source: Joel Best. Damned Lies and Statistics. University of California Press, 2012. [B041]

The news media certainly contributes to this misplaced fear:

As one Washington Post reporter put it. “Many of these children look and act like other kids” [or] “a lost generation”. [Yet] papers showed that crack-exposed kids suffer little permanent damage. [Instead, the] coverage of crack babies was perpetuating what he termed an “us-versus-them idea” about poor children. [...] The greatest impediment to cognitive development in young children is poverty.

Source: Barry Glassner. The culture of fear: Why Americans are afraid of the wrong things: Crime, drugs, minorities, teen moms, killer kids, mutants. Hachette UK, 2010. [B139]

Or consider an entirely different example with similarly dire undertones:

A 1987 article in a major newsmagazine predicted there might be ten million Americans infected with HIV by 1991 (the actual number of infections reported by 1991, according to the Centers for Disease Control, proved to be about 200,000).

Source: Joel Best. Damned Lies and Statistics. University of California Press, 2012. [B041]

Regarding the perceived dangers of video game violence (though those have been fading recently from the news), the prophetic nature of the media coverage bears some resemblance to the introduction of other technologies in that past:

During the golden age of radio scholars produced studies showing that listening impaired young people’s capacity to distinguish reality from fantasy. And centuries earlier Plato cautioned against those who would tell stories to youngsters. “Children cannot distinguish between what is allegory and what isn’t,” says Socrates in Plato’s Republic, “and opinions formed at that age are difficult to change.”

Source: Barry Glassner. The culture of fear: Why Americans are afraid of the wrong things: Crime, drugs, minorities, teen moms, killer kids, mutants. Hachette UK, 2010. [B139]

And remember that media speculation is often inaccurate and that news coverage can change on a dime:

Throughout the first week after the death of [Susan Smith's] children the press depicted her as a loving, heroic, small-town mom. [It was stories about] classmates having voted her “friendliest senior” of the class of 1989, or her teachers describing her as “a good kid,” or the neighbor who said of Smith and her husband, “I saw the love that they had for these children”. [Or think back to] the immediate presumption after the Oklahoma City bombing and the crash of TWA Flight 800 that Middle Eastern terrorists were to blame.

Source: Barry Glassner. The culture of fear: Why Americans are afraid of the wrong things: Crime, drugs, minorities, teen moms, killer kids, mutants. Hachette UK, 2010. [B139]

Exhibit M: Economists

"In all likelihood world inflation is over".

- IMF Managing Director, 1959

See Also: https://www.principlespersonalfinance.co.uk/blog/predictions-are-hard-especially-about-the-future

Or consider this criticism from fellow economist Robert Shiller:

No economist gave a credible forecast of the worldwide nature of the Great Depression of the 1930s before it happened, and only a handful predicted the peak of the US housing boom in 2005 or the “Great Recession” and “world financial crisis” of 2007–9.

Source: Robert J. Shiller. Narrative economics: How stories go viral and drive major economic events. Princeton University Press, 2019. [B118]

See Also: www.economicfailure.com

"By the time you read this story, the quirky cult company…will end its wild ride as an independent enterprise."

- Fortune, February 19, 1996⁷.

"Whether they stand alone or are acquired, Apple as we know it is cooked. It's so classic. It's so sad."

- A Forrester Research analyst, January 25, 1996 (quoted in The New York Times)⁷.

"For all of his success, all Steve Jobs had really accomplished was a temporary pause in Apple's long-term decline."

- Infinite Loop, by Michael S. Malone, 1996⁷.

"Apple's erratic performance has given it the reputation on Wall Street of a stock a long-term investor would probably avoid."

- Fortune, February 19, 1996⁷.

"Apple [is] a chaotic mess without a strategic vision and certainly no future."

- TIME Magazine, February 1996 issue⁵.

"'The idea that they're going to go back to the past to hit a big home run…is delusional,' says Dave Winer, a software developer."

- The Financial Times, July 11, 1997⁷.

"The iMac will only sell to some of the true believers. [It's] clean, elegant, floppy-free—and doomed."

- The Boston Globe, May 14, 1998⁷.

In 2001, when Apple launched their first Apple Store, Cliff Edwards, an ex-Apple employee wrote an article for Business Week that explained why the idea would fail.

Source: https://cdm.medium.com/funny-wrong-predictions-in-technology-and-business-6b80f125edf1

"Everyone’s always asking me when Apple will come out with a cellphone. My answer is, ‘Probably never.’ …It just ain’t gonna happen."

- David Pogue, The New York Times, just 9 months before the first iPhone was released in 2006.

Believe it or not, the iPhone wasn't a slam dunk when it first launched:

In June 2007, a few days before the iPhone appeared in stores, the media and advertising company Universal McCann issued a blockbuster report on Apple’s new product. They said it would flop. [...] The Universal McCann survey was massive, with ten thousand participants.

Source: Thompson, Derek. Hit Makers: How to Succeed in an Age of Distraction. United Kingdom, Penguin Publishing Group, 2017. [B055]

And while we are at it, here's some more silliness from the era:

Source: Dreams of Space Blog

Notes

• The Predictions About The Future quote is either Neils Bohr's, Mark Twain's or Yogi Berra's.

Sources

¹: https://www.wired.com/2007/10/failed-technolo/

²: https://www.av8n.com/physics/ex-cathedra.htm

³: https://bible.org/illustration/prophetic-goofs

⁴ : http://www.medicalgeek.com/off-topic/15445-fact-many-read-like-joke-today-10-a.html

⁵: https://abwebdesigns.co.uk/famous-bad-predictions-about-computers/

⁶ : https://mb.boardhost.com/IdeasForAmerica/msg/1631857534.html

⁷ : https://www.scientificamerican.com/article/pogue-all-time-worst-tech-predictions/

⁸: https://www.linkedin.com/pulse/20141013154334-17259505-famously-wrong-predictions-from-the-past

⁹: https://rpseawright.wordpress.com/2013/05/02/10-classic-failed-tech-predictions/#:~:text=From%20a%201939%20editorial%20in,'t%20time%20for%20it.%E2%80%9D

¹⁰: https://medium.com/quotes-and-thoughts/worst-predictions-ever-hard-to-believe-they-said-it-e9b481eb16ab