Swami Cognitive Dissonance

Swami Syndrome: A proclivity for predicting the future coupled with a blinding disconnect to the fact that a coin toss (or the proverbial monkey) would be more accurate than your lame prognostications.

Way back in June of 2005, The Big Swami wrote a sternly anti-Swami article entitled Apprentice Investor: The Folly of Forecasting. He speaks about the “perils of predictions” and how investors often give far too much weight to analysts, professors and other talking heads who are stalwart in their prognostications, yet hopelessly afflicted with Swami Syndrome.

I wish an SEC-mandated disclosure accompanied all pundit forecasts: “The undersigned states that he has no idea what’s going to happen in the future, and hereby declares that this prediction is merely a wildly unsupported speculation.”

The bottom line is that I’ve yet to find anyone who can accurately and consistently forecast the market behavior with any degree of accuracy, beyond short-term trend following. That inconvenient factoid never seems to dissuade the prophets — or the press — from their fortune-telling ways.

No one truly knows what tomorrow will bring. Nobody.

Those are some pretty strong statements regarding Swami Syndrome.

But - just 2 months later, in August of 2005, The Big Swami wrote an article entitled Real Estate Begins to Cool, wherein he lays out of the perils that face the US due to the Subprime Mortgage mess, and then concludes with a very bold prognostication:

We expect a recession in the 2006-07 time frame.

Yikes!! What part of “Nobody knows what tomorrow will bring” am I not understanding? Did the Big Swami have a sudden flash of insight into the workings of the universe that made him boldly pronounce a recession for 2006-2007, in bold type? Or was he just inflicted with that malady that seems to strike everyone who gets “Expert” tagged next to their name on the TV screen, Swami Syndrome?

Let’s check the Thesaurus, maybe we’re off base here:

Nahhh, we’re on the right track. Diagnosis confirmed?

Now there are a few rare souls out there who do seem to have a genuine knack for big picture prognostications. Is the Big Swami the real Salami?

We expect a recession in the 2006-07 time frame.

Well he made it easy for us on this one. Since its December of 2007 already, all we have to do is count the recessions in 2006 and 2007. Let’s see, growth, growth, growth, growth……….

Uh oh. Actually, we’re not even close to falling into a recession so far. And its basically 2008 already.

The Big Swami has one last chance on this one. He needs Q4 to show negative growth, and we need to follow that up with the same negativity for Q1 2008.

Let’s check back in the Spring. We will check on some other Big Swami pics as well in a later post.

 

-- Filed December 5, 2007 at 10:18 pm