#12 - Why Do Financial Forecasts Persist Despite Their Failures?

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Deeponomics

Deeponomics

17 episodes

1 week ago

Deeponomics is a podcast about the deep ideas shaping markets, finance, and accounting — grounded in academic research and critical thinking. Each episode draws from scholarly work to explore how investors make decisions, how narratives influence investments, and how theory connects to real-world finance. Expect conversations with researchers, deep dives into academic papers, and reflections on the stories behind the numbers.

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Deeponomics is a podcast about the deep ideas shaping markets, finance, and accounting — grounded in academic research and critical thinking. Each episode draws from scholarly work to explore how investors make decisions, how narratives influence investments, and how theory connects to real-world finance. Expect conversations with researchers, deep dives into academic papers, and reflections on the stories behind the numbers.

Show more...

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#12 - Why Do Financial Forecasts Persist Despite Their Failures?

Deeponomics

9 minutes 21 seconds

3 months ago

#12 - Why Do Financial Forecasts Persist Despite Their Failures?

Welcome, friend and future deep-dweller!

In this episode of Deeponomics, we take a closer look at the enduring practice of market forecasting—despite decades of evidence showing how rarely it works.

We explore three major schools of thought—neoclassical, behavioral, and institutional economics—to see whether any of them can justify the financial analyst’s role. Each offers a different lens on why forecasts are made, but none quite explains why they should work.

In the end, we suggest that forecasting is not really about prediction. It is about sensemaking. In a world of uncertainty, forecasts offer structure, direction, and a shared story we can act on—even when the future remains unknown.

References:

Leins, S. (2018) Stories of Capitalism: Inside the Role of Financial Analysts. Chicago: University of Chicago Press.

Working, H. (1934) ‘A random-difference series for use in the analysis of time series’, Journal of the American Statistical Association, 29(185), pp. 11–24.

Kendall, M.G. (1953) ‘The analysis of economic time series’, Journal of the Royal Statistical Society. Series A (General), 116(1), pp. 11–34.

Osborne, M.F.M. (1959) ‘Brownian motion in the stock market’, Operations Research, 7(2), pp. 145–173.

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