Anyone can make predictions. It turns out that educated people are no more accurate in their predictions than the unwashed masses. The problem is that they have higher confidence in their predictions, that is to say, they expect to be right.
The reason that may be a problem is that any number of factors could enter into the equation and cause reality to unfold differently from the prediction. If your profitability depends on being right, it could be a costly mistake. Being flexible and ready for any eventuality is valuable.
Just for fun, I’ve created a chart like you might see in any investment newsletter. Thanks to Google for providing the chart of the Canadian dollar vs. US dollar exchange rate.
My wife wants to spend some money in US dollars. She asked when the dollar will reach parity again. Of course, the truth is that I don’t know. But just for fun, I made up this chart and here’s the prediction:
The Canadian dollar will reach parity (1.00/1.00) with the US dollar between March 15 and April 15, 2010.
Now all that’s left is to wait and see what happens. I’m sure my wife will remain flexible: she’ll spend her money as soon as the Canadian dollar trades for $1.00 US, even if it comes before March.