Michael Mauboussin - Pattern Recognition and Public Markets (EP.370)
Capital Allocators – Inside the Institutional Investment Industry
Expert Forecasts vs. Simple Algorithms
Expert forecasts are often no better than simple algorithms, as experts tend to rely on personal experiences which may lead to biased predictions. Experts, like everyone else, use representative heuristics to match new situations with their limited personal databases. This approach can be problematic due to the limited scope of personal experiences and potential unclear causality components, resulting in unreliable predictive models even among experienced individuals.
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