This is a rant that has been doing rounds in my mind for some time now but I was not able to post it because I was extremely pre-occupied with other priorities of mine (I still am but I had to get this off my mind).

So what exactly is my problem with these “professional” pundits? Three actually — 1. They make too much noise. 2. People believe them just too much. 3. Tetlock thinks they are bad at predicting.

Actually, my biggest issue is with these so called Market Pundits and Industry Analysts but other pundits are also included in here.

But before I start explaining each of my issues with these fellas, let me tell you about the difference between an expert and a pundit.

Pundits are those “self-proclaimed experts” who go about hopping from one TV Studio to another, publishing columns after columns and make a living predicting stuff.

Experts, on other hand, are people who have a proven track record of making personal fortune by seizing the opportunities they foresaw. They are the people who you would not find on TV except in the Business News section and neither will you find their regular columns in any publication.

You see, I love the experts. They, unlike pundits, are never going to make definitive predictions, for you or anyone else other than they themselves atleast, and you will have to pick up subtle signs to understand what’s really going on in their mind. It isn’t that I like playing the game of hide and seek, I don’t.

However, the fact is that the experts don’t have to give you their analysis. In fact, it is in their best interest not to. Who doesn’t want an unfair advantage? But the point is that you also want an unfair edge. Don’t you?

So, in this quest to gain an unfair edge, we fall in a trap which is way too easy to fall into (hey, even I have a lot of times and made some stupid mistakes because of it, but now I am a lot smarter) and start thinking Pundits as experts.

But these pundits really have the knowledge of the stuff they are talking about. Otherwise, why else would they be on TV or have their names in print so often? So what’s the problem with them? For starters –

1. They make too much noise. First off, let’s make the difference between noise and signal clear. Both noise and signals are information (meaningful data) that your brain intercepts from your environment and other interactions.

You read a book, a magazine article, attend a seminar, talk on phone, attend a trade show or do anything else that involves thinking, listening, talking or seeing and makes any sense at all, what you are receiving is information.

So what exactly is the difference between noise and signals? On the face of it, both noise and signals are same but the difference is exactly the same difference as that exists between flagship-songs and filler-songs on a music cd.

Signal is the no-BS, no-fluff and to-the-point information that you can actually use to profit whereas noise is all-BS, total-fluff and nowhere-near-the-point information that you can rarely ever use to make profits, if any.

What exactly is the reason that every pundit has to make so much noise? Simple, they get paid to be on TV or write pages after pages of predictions and TV Channels and Print Publications are funded by advertisers who in turn want eyeballs.

The more these folks can keep people hooked to the screen and pages, the more cash the advertisers will pump in. So, it’s all business. Period.

But I don’t really have so much time to waste and that’s the biggest reason why I don’t like these so-called pundits.

By the way, if you were thinking that by noise I meant their shrilling voices, it could not be any further from truth. Most pundits have an addictive used-car salesman personality to suck you in. After all, both these professions really have a lot in common.

2. People believe them just too much. My second issue is that people believe these pundits too much. They quote their fluff like the word of authority. If these pundits are so smart, why don’t they go out and make insane profits that they claim you can make by listening to their advice.

For, another reason why it irritates me when people believe them so much and quote them so often, read the next point!

3. Tetlock thinks they are bad at making predictions. January 30, 2006 issue of Fortune carried a Column by Geoff Colvin in which he quoted a book Expert Political Judgment: How Good Is It? How Can We Know? by Philip E. Tetlock, a professor at the University of California at Berkeley.

The summary — Over seven years Tetlock got a wide range of experts and non experts (folks like you and me who don’t blow their own trumpet on TV or print) to answer carefully constructed questions about the likelihood of specific future events. Tetlock ended up with 82,361 forecasts, expressed in quantifiable form.

Result: Pundits could not correctly predict more than 20% of the variability in outcomes, whereas crude computer programs were able to explain 25% to 30%, simply by extrapolate the past, and sophisticated algorithms could explain 47%. And oh, even non-experts were about as good as the pundits in predicting the future.

Interesting, isn’t it? My reasoning : the noise they themselves generate is affecting their own minds. And since they have to absolutely come-what-may have to make a prediction about something, so it doesn’t matter if they actually have the actual experience / knowledge required to make that decisions.

Conclusion: Screw the pundits, read Blink by Malcolm Gladwell and start trusting your instinct when it comes to taking decisions (make sure that you’ve read Blink before you do this).