Friday, September 28, 2007

Features of the week

We've got a lot to cover in this Friday's edition of, "Features of the week".

Energy, food prices, environment, culture, liberty, protests, and emerging markets; It's all here, so pull up a chair and get acquainted with the following stories.

1. "Myanmar Forces Chase Down Protesters". Let me withdraw my earlier question and simply state the fact that the country's military has assaulted and killed civilian protesters.

Now make some of those protesters buddhist monks and you have some idea why this story is carrying such weight in the international press.

Even President Bush has condemned the acts of violence carried out by this "brutal" regime in their efforts to quell civilian protest, and if that's not irony, I don't know what is.

2. Meanwhile, I don't hear much objection to the rounding up and jailing of protesters when the acts are carried out by a "key ally" of the US, as is the case in Musharraf's Pakistan.

3. In Defense of Liberty. Very important, please read.

4. Freddie Mac chief warns of recession. Says US economy faces 40-45 percent chance of recession induced by housing market woes.

5. Cut the red tape. World Bank study ranks countries on ease of doing business.

6. A New Life in Panama? (Barron's). Bob Adams on America's wave of "silent emigration".

7. Bubble in emerging markets? FT's Joanna Chung handles the print story, while John Authers gives us the "Short View" via video at FT.com.

8. Flight to gold ETCs. Safe haven demand is not only apparent in spot gold, but in the new commodity ETFs (or, ETCs) as well.

9. Bullion rally unchecked by rising supplies. Gold continues its run despite increased selling from central banks.

10. Jim Rogers speaks to Bloomberg about oil, commodities, the Fed, and inflation.

11. Forget dog years, we are living in "China years", says Bloomberg's William Pesek.

12. The Financial Philosopher on, "Why The World Needs Philosophy".

13. Psych 101: Popular Culture - A YouTube Journey Through Time - Gary Tanashian.

14. Fed's rate cute does not help Americans - Axel Merk.

15. Rising food prices signal increased cost of living and inflation in China.

16. "Peak Everything" - an inteview with author Richard Heinberg.

17. Learning to live with Big Brother (Economist).

18. 13th century copy of the Magna Carta to be auctioned off at Sotheby's.

Thanks for reading Finance Trends Matter. Enjoy your weekend, everyone.

Thursday, September 27, 2007

The path to $80 oil

Since we talked about investing in natural resources and energy in, "Profiting from the reflation", I thought that we should follow up that discussion with an in depth look at the fundamentals driving higher oil prices and the outlook for our energy future.

For a thorough examination of these topics, let's revisit our August 2006 interview with energy investor, Bill Powers, of Powers Asset Management.

In this wide ranging discussion on energy, Powers fills us in on the outlook for global oil and gas production, the onset of "peak oil", possible options for an alternative energy future, and the increased role that nuclear power is likely to play in providing for our future energy needs.

You'll also find some discussion of Bill's notable (and very on the mark) oil price forecasts, and the reasoning behind his calls for significantly higher crude oil prices. You'll find that much of the reasoning behind his past energy calls is still in force, and that these trends are only now becoming more apparent to a larger number of market participants and observers.

And of course, we couldn't let Bill go without giving us a brief overview of his energy investment methods and outlook. You'll find a synopsis of his investment style towards the end of the interview, along with a few starter tips for would-be energy investors.

Hope you enjoyed this interview and have found a little perspective on how and why we've reached $80 oil.

For more updates to Bill Powers' energy outlook, be sure to look for his upcoming guest appearances on the Financial Sense Newshour as an energy guest expert.

Tuesday, September 25, 2007

Profiting from the reflation

As we mentioned yesterday in, "A good bear is hard to find", most everyone has recently been quite bullish on the U.S. stock market since the Fed came to the rescue with their liquidity injections and interest rate cuts.

Now, you may not be so eager to go out and start loading up on stocks just because there is a lot of money sloshing around and someone is keeping the party going. But you might be interested in some areas of the stock and commodities markets that could benefit from the reflation, bolstering their ongoing fundamentally driven advances.

Today we'll take a look at the concept of "profiting from the reflation" by highlighting some comments made by investor Jim Puplava in a recent Financial Sense Newshour broadcast.

If you've listened to the broadcasts before (and I highly recommend them), you'll certainly be familiar with some of the themes we're discussing here today. Jim has been recommending that his listeners gain exposure to the areas of commodities, natural resources, and mining shares for several years now. He has been bullish on energy, water, and the precious metals during that time frame.

In early 2005, he summed up his views on the developing bull market in commodities and tangibles in an article entitled, "Unloved, Undervalued, and Underowned".

Now, with more attention being focused on the commodity and resource sectors' recent gains, Puplava feels it's very likely that a lot of money will be funneled into these relatively small markets in the next few years. We could see greatly increased share prices and market caps for some of the companies in these sectors over the coming years.

He's also bullish on areas where spending will have to be maintained or greatly increased, such as infrastructure and industrial development. Besides that Jim's staying defensive, concentrating on consumer staples, healthcare, and good dividend-paying stocks.

But there's no need to take my word for it; why don't you have a listen to the broadcast, or read the transcript and some of Jim's past articles. This way, you'll be up to date on profiting from the reflation.

We'll have more on resource related investments in the days ahead. Keep an eye out for upcoming posts on investing in energy and junior mining shares.

Monday, September 24, 2007

A good bear is hard to find

Bloomberg reports that the latest Fed rate cuts have induced widespread feelings of bullishness among investors.

Now that the mood of the marketplace has turned positive once again, it seems that bears are thin on the ground these days. Bloomberg notes that Wall Street strategists are the most bullish they've been since 2000. Investors are said to be "celebrating".

Excerpt from, "Suddenly a Good Bear is Hard to Find..."

Investors have been celebrating since the Fed's surprise half-point rate cut Sept. 18 sent the Morgan Stanley Capital International World Index of 23 developed markets on its biggest two-day rally since June 2006. They snapped up shares of commodity producers and industrial companies -- which became cheap last month after global stock prices fell to the least expensive in 12 years and will benefit the most when the economy grows.

So things are humming along nicely, and there are bargains to be had in the stock market.

But wait, they did manage to find two rather bearish fund managers who can offer up an opinion for this story...

The bears haven't all retreated. Balestra Capital Ltd.'s Jim Melcher and the Leuthold Group say the bulls are ignoring the reason for the central bank's rate cut -- concern that the world's largest economy is heading into a tailspin.

Policy makers ``realize that there's a real economic threat of recession if we're not already in one and there's a brewing financial crisis,'' said Melcher, whose $260 million Balestra Capital Partners LP hedge fund in New York has returned 124 percent this year with bets against financial shares and bonds backed by subprime mortgages.

The rebound in prices ``should be viewed as the eye of the hurricane,'' Steven Leuthold, whose $1.72 billion Leuthold Core Investment Fund has beaten 97 percent of like funds this year, wrote in the September issue of the firm's monthly research report. The Minneapolis-based Leuthold Group is concerned the economy will contract next year and cut its equity allocation to 30 percent from 50 percent on July 17, two days before the Standard & Poor's 500 Index reached a record.

I don't know which way the economy's going, but maybe if I act like I do you'll invite me on your tv program and I can spout out some numbers and statistics while looking very confident about it all.

Seriously though, you have to laugh at all this false precision and the sheer ridiculousness of all this forecasting. Does anyone really believe that the future direction of the stock market or the economy can be predicted by Wall Street strategists or IMF/World Bank statistics ?

Yes, I guess there are many who do believe it or at least play along for reasons of their own. Otherwise, this would have stopped a long time ago.

In the end, none of this really matters to professional investment managers as much as their directive: "here, take this money and buy some stocks with it!". I cite the following example:

James Swanson of MFS is also looking to purchase shares of the largest technology companies, along with regional banks. He says now is a time to buy equities even though cheaper credit may exacerbate the risk of higher inflation in three to four years.

``I am concerned about it, but what the heck,'' Swanson, who helps oversee about $200 billion as chief investment strategist at Boston-based MFS, said from Truro, Massachusetts. ``It's four years down the road.''

I think that about sums it up.

Friday, September 21, 2007

Features of the week

Ready for this Friday's edition of "Features of the week"? Splendid. Pull up a chair and enjoy these great articles and interview links culled from the web & blogosphere.

1. Gold hits 28-year high as oil surges. Here's some of our past commentary on gold and oil prices.

Plus, a recap of last April's oil price debate between Steve Forbes and T. Boone Pickens.

2. Canadian dollar trades above US $1 mark for the first time in nearly 31 years.

3. John Authers discusses long-term consequences of a dollar decline in this September 20 video update at FT.com.

4. The Big Picture on, "Fear of a dollar collapse - Part II".

5. Sub-Saharan markets attract interest Gulf investors' interest.

6. Worries that Saudi Arabia might end its dollar peg.

7. Jim Rogers and Marc Faber comment on the Fed's recent moves.

8. Wilbur Ross sees value in the wreckage of the mortgage business.

9. Bear Mountain Bull highlights some important charts.

10. New Order fans: one from the jukebox archives. New Order live in-studio session for BBC Radio, 1984.

11. Sir Alan, so good to see you! Jon Stewart puts some interesting questions to former Fed Chairman Alan Greenspan in this Daily Show interview.

12. The ICI's Civics Literacy Quiz and what the results say about American students' knowledge of civics, history, and the market economy.

13. Eat less to live longer? Why restricting calories may lead to longetivity.

14. Hedge fund chiefs, private equity guys among new entrants to the Forbes 400.

15. So the big angle with this latest Forbes list is that $1 billion is no longer enough to join the ranks of the Forbes 400.

As we noted back in March, when Forbes published their World's Billionaires list, becoming a billionaire is no longer the rare threshold that it once was.

Thank inflation and the steady devaluation of the world's paper currencies. Today's money is backed by nothing of real value and you can print this stuff at will, so what did you expect?

For a look back at the era when having a million dollars meant something (never mind having a billion), check out, "$1 million: What's the infatuation", and, "Tallying up the millionaires".

Thanks for reading Finance Trends Matter. Enjoy your weekend!

Thursday, September 20, 2007

"The Fed is irrelevant"

Have you been keeping a close eye on the Fed's moves? Did the recent 50 basis point cut in the fed funds rate shock or surprise you? Is the Fed doing the right thing?

Well, according to noted investor Jim Rogers, the Feds actions are likely to hasten the dollar's demise and will be disastrous for the markets and the nation's economic well being.

Excerpt from Bloomberg article:

Interest rate cuts by Federal Reserve Chairman Ben S. Bernanke will spur inflation, cause the U.S. dollar to collapse and push the world's largest economy into recession, investors Jim Rogers and Marc Faber said.

``Every time the Fed turns around to save its friends on Wall Street, it makes the situation worse,'' Rogers said in an interview from Shanghai. ``If Bernanke starts running those printing presses even faster than he's doing already, yes we are going to have a serious recession. The dollar's going to collapse, the bond market's going to collapse. There's going to be a lot of problems in the U.S.''

Check out the Bloomberg video interview with Rogers as well (you'll also find that clip, and an interview with Marc Faber, in the "media on demand" portion of the above-linked article page).

Jim makes some interesting and pointed comments about the Fed's recent actions and the obsession with Fed-watching (an activity he regards as "irrelevant"). He also provides some good common sense, which the media no longer seems to possess to any degree.

And if you have any doubt about Rogers' prognosis for the US currency or his comments about the Fed, please have a glimpse of history and tell me how well our central bank has acheived its original mandate of providing "price stability" and a sound currency.

Monday, September 17, 2007

A.W. Jones & hedge fund history

Here's something that I've wanted to post for a while now, but somehow never got around to. 

Many of you are, I'm sure, familiar with the historical development of hedge funds and the story of how they came to be. For those who haven't heard/read the story, I thought the following might provide a useful introduction to the world's most glamorous investment vehicle, the "hedged fund"


Most media accounts of the hedge fund industry's growth typically begin with the founding of Alfred Winslow Jones' original long/short fund back in 1949. Jones reportedly had the idea for his hedged style of investment partnership while researching and writing the article, "Fashions in Forecasting", that year for Fortune magazine. 

By 1966, A.W. Jones and Co. posted returns which trounced all the leading mutual funds over a 5 and 10 year period. 

His success spawned a new group of offspring hedge funds, and led Fortune's Carol Loomis to revisit Jones' record in the seminal piece, "The Jones Nobody Keeps Up With". The rest, as they say, is history. 

Please enjoy these articles, and visit A.W. Jones' article page for more hedge fund history.

Friday, September 14, 2007

Features of the week

We've got some great stories and interviews for you in this week's installment of "Features", so kick back and browse away. You'll be a little bit more informed by the time you finish!

1. "They've Got Class". Berkshire Hathaway tops the Barron's survey of most respected companies. Hat tip to Fat Pitch Financials.

2. Marc Faber says there is, "No option for Fed except a bail out!".

3. "Major rally seen for cotton". Investors like Jim Rogers and Roland Jansen see room for this agricultural commodity to run.

4. Putin dissolves government, names Victor Zubkov as new Prime Minister.

5. Abe resigns as Japan's Prime Minister, leaving Yasuo Fukuda and Taro Aso to battle for the position.

6. Mohamed El-Erian in a recent interview with Pensions and Investments, just before his departure from Harvard Management Co. and return to Pimco.

7. Face to Face with John Paulson, of Paulson & Co. funds.

8. Financial firms such as HSBC, Merrill Lynch continue to feel the hit from subprime.

9.
Research Affiliates Chairman Rob Arnott says a subprime Bailout would be bad news.

10. China raises rates for the fifth time in 2007, but economist Andy Xie says the country is "far behind" the inflation rate

11. Gold rises as investors seek currency alternative.

12. Look here for an inflation proof currency.

13. Burj Dubai becomes the world's tallest free-standing structure.

14. "Million Dollar Mentor". SFO magazine interviews Merrill Oster,
farmer, entrepreneur, philanthropist, and futures industry pioneer.

15.
Homeschooling comes of age.

16.
Learn Mandarin Chinese in 10 easy lessons.

Enjoy reading Finance Trends Matter? Bookmark us, and tell a friend!

Wednesday, September 12, 2007

Again with the "savings glut"?

I'm sure by now you've seen or heard Ben Bernanke's latest references to the global "savings glut", the phenomenon that is supposedly responsible for the fabulous demand for U.S. debt and low interest rates.

For those who are in the dark, here's a quick refresher, courtesy of Bloomberg:

Federal Reserve Chairman Ben S. Bernanke said the ``global saving glut'' is still helping to keep interest rates low, and they may not rise much in the event that the pool of excess capital dwindles in coming decades.


While theory suggests that yields, adjusted for inflation, would rise as saving diminishes, ``factors other than the saving- investment balance affect long-term interest rates,'' Bernanke said in a speech in Berlin. ``We are again reminded of the need to maintain appropriate humility in forecasting.''


Nations such as China have invested the proceeds of trade surpluses in U.S. Treasuries, driving yields lower. China has a record $1.3 trillion of foreign-exchange reserves and household savings that amount to almost one-fifth of its economy. Investors abroad hold half of Treasuries outstanding, helping drive benchmark 10-year note yields down to 4.37 percent on average in the past five years, from 6.82 percent in the 1990s.


The theory of a global savings glut was first put forward by Bernanke in a March 2005 speech, which highlighted the shift that turned developing economies from "borrowers on international capital to large net lenders". Consequently, these now prospering nations were said to be holding down longer term interest rates through their outsized demand for U.S. government debt.


This line of reasoning led many to believe that interest rates were low because the global pool of savings was "too large".

But as I pointed it out in a previous article, due to the rampant increases of money and credit supply worldwide, the "savings glut" might more accurately be characterized as a liquidity glut.

Over the past few years, the money supply in most leading nations has increased every single year at a consistent, double-digit pace.

At the same time, leverage created through the financial system increased the availability of money substitutes and created an environment of greater liquidity and enhanced market participants' appetite for risk.

If there's been a glut of anything over the past decade, it's been cheap fiat money, much of it exchanged by the US for foreign bought goods. It works the same way anywhere across the globe; someone prints currency, puts it into circulation, then exchanges that money for goods and services at home and abroad.

All that money has to go somewhere, and this is how it works:


So, in the US recently, the money supply is growing at over 10% per year; in Europe the money supply is growing between 11 and 12% on an annualized basis; and in China the money supply is growing at an annual rate of 18%. So, there are a lot of people saying, “there’s just a glut of savings.”

Well, typically what happens is that through the US trade deficit, we buy goods from foreigners, say Chinese or Japanese, we pay them in dollars, those dollars get deposited in banks in Japan and China. They get converted into their local currency, either Japanese yen or the yuan. What will happen is central banks will come in and mop up those dollars because they don’t want their currencies going down, and then what they’ll do is turn around and sell their own currency and buy, let’s say, US Treasuries.


This idea of a savings glut, put forth by Ben Bernanke and endorsed by then Fed Chairman Alan Greenspan in 2005, is beginning to sound like the Fed's "big lie". Repeated often enough, it just may take on the appearance of truth to many observers.


Please read on for more commentary on this issue, from people who are far more knowledgeable than I am.


1. "Is There a Glut of Saving?" - Frank Shostak.


2. "The Fed's Wild Imagination" - Dr. Kurt Richebacher


3. FSN Big Picture 12-17-05 - Jim Puplava and John Loeffler discuss global money supply and the global "printing glut".

Tuesday, September 11, 2007

Excellent timing: John Paulson

You may have heard about the outstanding performance of the Paulson Credit Opportunities Fund, which sailed through, and greatly profited from, the recent credit market turmoil.

The fund, established by John Paulson of Paulson & Co., has done extremely well this year, thanks to its timely shorting of subprime mortgage bonds.

I thought it might be interesting to update our "Subprime: winners and losers" post with a recent profile of John Paulson, man of the hour of the investment universe (and no doubt, man of the year to his investors).

In this July interview with Pensions & Investments, Paulson described the thinking behind his fund's investment stance.

What attracted us to this particular position is that overall, we feel that we are in a credit bubble. We feel that there is too much risk going long (in) credit instruments since spreads are so tight. So we concluded that the best opportunities were on the short side.

The beauty of shorting a bond is that the maximum you can lose is the spread over the benchmark; yet if the bond defaults, you can potentially make more. So it’s an asymmetrical risk-return tradeoff. In the case of subprime securities, we targeted the triple-B bonds, which are the lowest tranches in the subprime securitization.

For more see, "Excellent timing: Face to Face with John Paulson".

Monday, September 10, 2007

Interest rates & inflation arbitrage

Where are U.S. interest rates headed? This seems to be the question that's been on everyone's mind in recent days.

Actually, it's beginning to seem like a Fed rate cut is a foregone conclusion (at least in the consensus view), and that the only real question remaining is the extent of the expected rate cuts. Will it be 25 basis points or 50?

There was an interesting discussion of interest rates and inflation in the first hour segment of the Financial Sense Newshour broadcast (September 8, 2007).

Host Jim Puplava spoke with guests Tim Wood and Paul Nolte about the likely direction of interest rates, and the economic picture going forward. There were some interesting comments made about the political outcomes of a possible/likely recession, as well as some discussion of the Fed's ability to revitalize the economy via a helicopter-liquidity drop.

Who would still want to borrow money in the next easy money cycle? Jim Puplava had an interesting response to this question voiced by Tim Wood. He noted that interest rates were still well below the double-digit rate of money supply growth, thereby allowing a possibly stimulative inflation arbitrage, with hedge funds and speculators taking advantage of this spread.

Also, Paul Nolte notes that a Fed interest rate cut is historically likely, and he expects 25 basis point cuts at each of the next 3-4 Fed meetings should economic data continue on its present path. His best guess has the Fed continuing to cut rates until the fed funds rate roughly equals core inflation, at a level of zero real interest rates, a point at which the Fed usually stops.

How are the precious metals reacting to this scenario? See, "Gold Gains on Outlook for U.S. Interest Rates, Silver Declines", for more.

Friday, September 07, 2007

Features of the week

Some articles and blog posts of interest:

1. Jim Rogers says India and China will continue to drive commodity prices.

2. "Commodity prices hurting consumers in India".

At least they got the part about supply and demand right. Notice that there is no mention in this article of government fueling inflation through double-digit rate increases of the money supply. As usual, speculators and middlemen take the blame.

3. "What Lies Beneath", from Doug Wakefield and Ben Hill.

Ah, here we find those pesky little money supply growth figures for India and China. A taste of global money and credit creation. And you wonder why we have inflation worldwide?

4. Top 25 quotes on the Credit Crisis of '07.

5. Richard Bove of Punk Ziegel says the Fed is interfering with the markets by pouring money into the financial system. Interview with Bloomberg's Tom Keene (hat tip to the Mises blog).

6. Global stock market performance round-up from Investment Postcards.

7. Traderfeed tells us how large traders disguise their buying and selling.

8. The ECB, BOE, and Fed continue on the path of monetary inflation.

9. Peter Thiel tells Mercury News: "we need to prepare for artificial intelligence".

10. The rise of data-driven decision making: Expert vs. the machine.

11. Satyajit Das holds forth in a Q&A on quantitative investing.

For info on how the quant funds fared in recent weeks, see the WSJ article, "How Market Turmoil Waylaid the 'Quants".

12. "Unsafe Havens". A Bloomberg Magazine report on U.S. money market funds.

13. "The Great Capitalist Novel". Greg Davis on Garet Garett's novel, The Driver.

14. Gluttons for punishment? "Appetite for CDOs, other risky debt, up". Hat tip to the Kirk Report.

15. The Economist on the "Atomic renaissance" and a new age of nuclear power.

16. Deborah Gordon on Ants, Humans, the Division of Labor, and Emergent Order. An Econtalk interview on the order that emerges without hierarchy, control, or centralized authority.

That's all, folks. Enjoy, and thanks for reading Finance Trends Matter.

Thursday, September 06, 2007

Expert vs. the machine

I've been coming across and reading a fair amount of material on the rise of data-driven decision making lately.

In fact, Monday's expert quiz was taken from an FT.com article on the subject, entitled, "How computers routed the experts".

Whether by accident or design, I seem to be stumbling on one piece after another on the subject, as well as some analysis on expert performance.

I thought it might be a good idea to put all of these items into one post, and allow you, the reader, to sort them out. But first, a few words about our latest theme, the expert vs. the machine.

Over at EconLog, Arnold Kling mentions that he is currently reading through Ian Ayres' new book, Supercrunchers.

The book's focus is the rise of statistical decision making, and Kling quotes a relevant passage from an early part of the book to establish this idea's importance.

"We are in a historic moment of horse-versus-locomotive competition, where intuitive and experiential expertise is losing out time and time again to number crunching."

If you happened to read through the beginning of Michael Mauboussin's essay on expert performance (found in Wednesday's post, "Becoming an expert"), then you'll no doubt recognize the parallels between the essay and Ayres' book.

To illustrate their discussions of data-driven analysis, both writers decided to cite the example of ongoing changes in the field of medicine. Due to advances in medical technology and the advent of the "Super Crunching revolution", doctors now find themselves pitting their judgement (or, diagnosis) against the analysis of a machine.

According to the authors, this type of decision making battle will increasingly play out over the coming years, with the traditional experts and prognosticators pitting their judgement against the findings of data-crunching computers. This conflict will be present in any number of areas in our daily lives.

We already see the onset of this theme in the areas of investing and market speculation. As we noted back in our May 25th "Features", the rise of scientific and quantitative investing is made apparent by the success of James Simons' Renaissance Technologies fund, and the increased adoption of computer-driven trading and artificial intelligence programming.

But will computers be able to successfully mimic or replace human judgement and decision making?

As The Financial Philosoper recently noted, investors seem to forget that computers offer help with strategies and organizing data, but they cannot replace our judgement or learn from accumulated wisdom.

At least not yet...

Wednesday, September 05, 2007

Becoming an expert

After posting Monday's expert quiz, I decided to do a quick Google search on the "are you an expert?" theme. I found some more useful info on this topic right off the bat, and thought I'd share it with you.

While Monday's "Are you an expert?" quiz demonstrated that most people are overconfident when making forecasts, today's info is a little bit different in nature.

Instead of focusing on most people's tendency to view themselves as experts, we will learn exactly what it is that makes someone an expert in a given field or activity.

We'll also learn about expert performance, and whether or not experts provide value in assessing situations and solving problems. Should be interesting, especially since these lessons are applied to the field of investing.

Here then, is Legg Mason Capital Management's take on expert performance, "Are you an expert?" (PDF).

Written by Michael J. Mauboussin, this piece makes an excellent follow up to our recent quiz, and should provide some insight on the characteristics shared by true experts, and their place in the world of investing.

Hope you find it worthwhile, and enjoy.

Monday, September 03, 2007

Are you an expert?

Are you an expert?

Do you have confidence in your ability to reasonably predict figures and outcomes when presented with new questions and problems, or are you (like most of us) overconfident in your ability to guess correctly?

Here's an interesting little quiz from FT.com that will help you find out.

But first, an explanation and some ground rules, taken from the quiz site:


The human mind tends to suffer from a number of well-documented cognitive failings and biases that distort our ability to predict accurately. We tend to give too much weight to unusual events that seem salient. And once we form a mistaken belief about something, we tend to cling to it. As new evidence arrives, we’re likely to discount contrary evidence and focus instead on evidence that supports our pre-existing beliefs.

In fact, it’s possible to test your own ability to make unbiased estimates. For each of the following 10 questions, give the range of answers that you are 90 per cent confident contains the correct answer. For example, for the first question, you are supposed to fill in the blanks: ”I am 90 per cent confident that Martin Luther King’s age at the time of his death was somewhere between ___ years and ___ years.” Don’t worry about not knowing the exact answer – and no using Google.

So now that you know what's in store, proceed on to the quiz.

When you finish, you'll find an answer key link to these 10 questions. Have fun, and feel free to share your results in the comments section (but please don't reveal any of the quiz answers).


You may also wish to share this link with some of your friends and associates; see how they fare in the forecasting/confidence game!