Reconsidering Annual Predictions

This week is the tippy-top of the peak season for the annual prediction business. Stories are rolling out either reflecting on the accuracy of 2010 forecasts or presenting 2011 projections. These offerings have a brief shelf life, then get tucked away and are largely forgotten. From the middle of December until early January, a select few are dusted off for a comparison between the year's history and what was anticipated.

Roger Nusbaum, in his thoughtful Random Roger financial blog, pointed out the difficulty of a given forecast fitting neatly into a calendar year. This wise observation, if embraced, would take the steam out of many year-end anxieties characterized by ardent New Year's resolutions. That's easier said than done. The December holidays offer a ready-made break for planning, along with the psychologically potent atmosphere of renewal associated with the new calendar year.

Nusbaum pointed out that an entire stock market cycle is a better, more sensible time frame for financial forecasts. If one extends that concept to other endeavors, the benefits could be substantial. That sounds like a good way to start the new year.