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Alexander Ineichen Benedicte Gravrand, Opalesque Geneva:

Alexander Ineichen, founder of Ineichen Research and Management, an independent research firm based near Zurich, recently produced an interesting risk management research piece on forecasting and nowcasting (called Nowcasting and Financial Wizardry). In this piece, he displays, with examples and statistics, the imprecision of forecasting and the logic of nowcasting for decision making in finance.

The piece is also entertaining because he recalls quite a few past predictions made famous for their sheer inaccuracy, such as "The horse is here to stay, but the automobile is only a novelty – a fad," or "There is a world market for maybe five computers," or even, "The bomb will never go off." Within finance, a similar number of goofy predictions have been made, much to the subsequent embarrassment of the forecasters - most of whom, Ineichen notes, well educated and confident individuals.

"Dozens of studies discrediting experts have made it clear that expert failure extends far beyond the investment scene," he writes. "And the problems often reside in man’s information processing capabilities.

"Current work indicates that the expert is a serial or sequential processor of data who can handle information reliably in a linear manner – that is, he can move from one point to the next in a logical sequence. However, a solution to a complex problem can require configural (......................

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