Wall Street analystss view is too short term.

And that includes Jason Ruspini.


– Keep in mind that, at inception, Apple also underestimated the iPad numbers. They had to ramp up production, later on.

– See Paul Hewitt&#8217-s comment, below.

One thought on “Wall Street analystss view is too short term.

  1. Paul Hewitt said:

    The example in the link is rather interesting. There were two small groups of predictors. All of the individuals were poor forecasters. We can’t really call either group a “crowd”, as the term is used in connection with collective intelligence, because it is too small. However, it is clear that if we calculated the average of the predictions, it would be seriously wrong.

    Galton’s ox example demonstrated a very accurate collective prediction, yet this prediction of ipad sales is WAY off the mark. How can this be?

    Here’s a possible reason why one “market” works and the other does not. In Galton’s ox story, there is a relatively small range of possible outcomes (butchered weight of the ox). Consequently, we should expect that most of the predictions (or even guesses) would be reasonably close to the average. With enough guessers, the prediction errors would cancel out, leaving a fairly accurate prediction. This is exactly what happened.

    In the ipad prediction case, the range of possible outcomes is very large. There is NO past experience upon which to base predictions about the future sales of a new product. Guessers (I think it is safe to call them that) have few reliable models to help them predict (new product), they are lacking information, and there is a huge range of possible outcomes. It is no surprise that no one was even close to the true answer.

    More than likely, every forecaster would have been biased against very high predictions, as they would be outlier predictions. Since they weren’t comfortable guessing very high (or very low), the guesses were biased and would be reflected in the collective forecast. Who knows whether a prediction market would have come up with a more accurate prediction. I’m guessing (pun intended) it would not.

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