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  #21  
Old 09-08-2010, 11:18 AM
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Originally Posted by limabeanactuary View Post
A lot of times, the best one can do is simply provide the results from various scenarios.

Historical scenarios might be a good place to start, especially extreme scenarios we've seen in the past.

If it's happened before, chances are good it can (and will) happen again.
Yup. Especially your first sentence.

Bruce
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  #22  
Old 09-08-2010, 11:47 AM
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Even short-term forecasts (like 90 days ahead) were essentially worthless.
I find this surprising. My intuition wants me to believe that 90 days from now will be closer to current experience than some long term mean (if any). Was there a reason that the short term forecasts were worthless as well? Politics? Short term variance too great?
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  #23  
Old 09-08-2010, 11:53 AM
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The CPI jumps around due to essentially unpredictable events like changes in oil prices. Significant changes in the CPI are almost always unexpected.

Bruce
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  #24  
Old 09-08-2010, 01:22 PM
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The CPI jumps around due to essentially unpredictable events like changes in oil prices. Significant changes in the CPI are almost always unexpected.

Bruce
Ok thanks!

I looked at some data too. Even quarterly it's too variant to pin down.
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  #25  
Old 09-09-2010, 12:41 PM
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Originally Posted by limabeanactuary View Post
A lot of times, the best one can do is simply provide the results from various scenarios.

Historical scenarios might be a good place to start, especially extreme scenarios we've seen in the past.

If it's happened before, chances are good it can (and will) happen again.
Here's where I disagree. I think that the information gleaned from the past experience pushes society to avoid the mistakes, omissions, or greed of the past. We continue to find new ways to **** up, but there's only been one Tech Bubble bursting, only one Great Depression, only one Holland tulip bulb mania, and on and on.

I agree that providing results of various scenarios is good. Unfortunately most of the scenarios we consider don't have anything to do with the future. They are mostly buried in the past. However, I make no claims to be able to predict anything like this myself.
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  #26  
Old 09-09-2010, 01:06 PM
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Here's where I disagree. I think that the information gleaned from the past experience pushes society to avoid the mistakes, omissions, or greed of the past. We continue to find new ways to **** up, but there's only been one Tech Bubble bursting, only one Great Depression, only one Holland tulip bulb mania, and on and on.

I agree that providing results of various scenarios is good. Unfortunately most of the scenarios we consider don't have anything to do with the future. They are mostly buried in the past. However, I make no claims to be able to predict anything like this myself.
You know, people have had lots of experience with Ponzi frauds, and yet they keep happening over and over again. On an individual scale, I've definitely seen the same people make the exact same mistakes over and over, even though they have had these mistakes pointed out to them (and they agree those were mistakes.) The details may differ a little bit (Ponzi's original scheme involved stamps or postal orders or something), but there are lots of things that are the same.

I'm not saying that we'll have seen the most extreme scenarios for all time. But if whatever you're looking at cannot weather what has actually happened in history, you're in a bad place.

In particular, I'm thinking of Equitable Life's annuity guarantees, which assumed that interest rates (in the UK) wouldn't go low. Even thought they had been low several times before. They went bare on the GAO risk, and now they're a big part of history. Actuarial history, too, with the Morris Review.
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  #27  
Old 09-09-2010, 02:40 PM
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Originally Posted by FattyMcGee View Post
Here's where I disagree. I think that the information gleaned from the past experience pushes society to avoid the mistakes, omissions, or greed of the past. We continue to find new ways to **** up, but there's only been one Tech Bubble bursting, only one Great Depression, only one Holland tulip bulb mania, and on and on.

I agree that providing results of various scenarios is good. Unfortunately most of the scenarios we consider don't have anything to do with the future. They are mostly buried in the past. However, I make no claims to be able to predict anything like this myself.
"We learn from history that we learn nothing from history."
- George Bernard Shaw
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  #28  
Old 09-27-2010, 11:54 AM
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Mountain Hawk tells you what I perhaps should have said.
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I'm not sure how you can even come up with an estimate with that little amount of data, without putting a range around it so large that makes the estimate useless.
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