01/15/2021
I'm sharing this excerpt from the 1996 masterpiece "The Great Wave: Price Revolutions and the Rhythm of History" as an important reminder to Advisors to remain objective when forecasting economic events. I hope you enjoy this quote by David Hackett Fischer in the Conclusion of his book. I think we would all benefit from heeding his financial advice.
‘Works on this subject [economics] often end with a book of Revelations, or at least a chapter of Jeremiah, in which the reader is warned that we are heading for disaster—unless the author's ideas are speedily enacted. These dark prophecies find a growing market with modern readers, who appear to have an insatiable appetite for predictions of their own impending doom.
‘Even when prophecies fail, they are merely updated and sell briskly once again. They call to mind the career of the Reverend Samuel Miller, a Baptist minister in nineteenth century New England, who predicted that the world would end no later than December 31, 1843. When the fatal day approached, the Prophet discovered an error in his computations. He announced that the last trump had been rescheduled to March 21, 1844.
‘His followers grew to many hundreds. They donned special "resurrection robes" and gathered to await the day of judgment. But Samuel Miller found another mistake in his arithmetic, and postponed the end of the world once again, this time to October 22, 1844. The faithful were undeterred. Their numbers rose so high that on the appointed day, business came to a halt in parts of New England. But Samuel Miller revised his numbers yet again and went on prophesying until his end arrived—without warning—in 1849.
‘Those who believe that the economic future has been revealed to them should remember the story of Samuel Miller. They might also reflect on the wisdom of John Kenneth Galbraith, who observes that "the most common qualification of the economic forecaster is not in knowing, but in not knowing that he does not know. His greatest advantage is that all predictions, right or wrong, are soon forgotten."
‘Historians have special reasons for caution, for they will recall the fate of earlier attempts to know the future. They also have problems enough with the past. Further, they understand that predictions fail not because historical knowledge is limited, but because of the nature of history itself.’
-Lance Dwight,
Owner and President of Dwight Investment Counsel
