The 2017 Issue with Forecasting centers on one of the biggest challenges for investors: Cutting through the sea of noise in order to mitigate uncertainty.
In 2016, we saw a slight change in how media outlets message forecasts of their experts. In December, MarketWatch acknowledged that its predictions were no better than a coin flip. It was recognition of the flaws in forecasting. It was an admission that in many media circles, forecasting is entertainment and not a study of behavioral science. “Click bait” headlines will continue to generate traffic, but it’s reassuring that audiences have caught on and some media outlets are embracing data science and the forecasting platforms we introduced in 2015 and 2016 and categorizing the false prophets as entertainers instead of know-all experts.
Which brings us to the bold cover of this year’s issue and the figure: Dow 71,406.
This year’s cover is a nod to the outlandish predictions of the past and future. In 1999, we saw books called “Dow 36,000: Why this Time is Different,” Dow 40,000: Strategies for Profiting from the Greatest Bull Market in History” and, even “Dow 100,000: Fact or Fiction?”
Predictions for $5,000 per ounce gold and 50% market crashes have been the norm on CNBC during the slow news days of the last decade, while the inception of the online media has exacerbated that issue.
Some readers will pick up the magazine when their eyes see the words Dow 71,406. But, we also know that it’s the real numbers that matter – the figure that touches on the best of data science in today’s world is the unclear figure to your left: Dow 21,406; a figure devised by probability assessment platform EidoSearch. The company, based on thousands of historical patterns, foresees a 50% probability that the Dow will finish 2017 above that figure.
This year we discuss a number of different forecasting tools and platforms to help readers make better investment decisions.
To help better assess geopolitical uncertainty, we welcome PRS Group, a quantifiable forecasting firm, which offers multiple scenarios for 2017 in the United States, France, Germany, China and the United Kingdom. Using a methodology that has been back-tested 42 years and a boots-on-the-ground approach to its analysis, PRS analysts provide probability assessments, scenario analysis and critical data that will help one make better-informed decisions.
Next, we visit with EidoSearch CEO David Kedmey, who lays out how new advancements in artificial intelligence and deep learning have helped statisticians better quantify the unknown.
Next, as traders struggle with uncertainty and risk, Keith Fitz-Gerald of Money Map Press outlines starting points for traders to improve their odds for success, and how to confront risk through scenario analysis in the year ahead.
Next, we profile Unanimous A.I., a San Francisco startup that has tapped into the collective power of Swarm Intelligence. In a partnership with Unanimous A.I., Modern Trader is inviting readers to take part in one of the most cutting-edge forecasting platforms as it expands into financial services and challenges how crowds and individuals forecast future outcomes.
Then, we offer a number of predictions from some of the top and emerging minds in finance and calculate the probabilities of their expectations in the year ahead. This exercise provides readers with a deeper understanding of where their expectations fall in line with the past, and helps navigate a better understanding of what factors drive their expectations in a different direction than the most probabilistic outcomes.
Finally, we have one last addition to this year’s Issue with Forecasting. After significant consideration, Modern Trader has named cybersecurity as a must-own sector of 2017 and in the years ahead. Spending in the industry is expected to explode during the next five years, but it is difficult to navigate through so many stocks. That’s why we’ve asked defense and technology analyst Michael Robinson to share his three-part strategy and picks for the sector. In addition, Timothy Summers, who heads up his own cyber strategy consulting firm, breaks down the sector and provides analysis on some well-known and not so well-known players in the space.
No, the Dow will not hit 71,406 in 2017. But we’ll make you a better trader because of curiosity and conviction in the year ahead.