Black Swan event

What did Denrell and Fang (2010) discover about the track record of economists who excelled at forecasting 'extreme' outcomes?

They had a worse overall record. That is, aside from severe outcomes, they projected incorrectly in all other cases.

What exactly is a Black Swan event?

A haphazard and unexpected scenario that deviates from the usual and is difficult to foresee.

What exactly is the 40% rule, and how do certain forecasters use it to their advantage?

To be clear, the 40% rule is ideal for creating a catchy title while still covering your butt. Forecast that there’s a 40% chance that the Dow Jones Industrial Average clears 12,000 by year end: If it does, you’ll look like a sage, and if it doesn’t, well, you didn’t say it’s the most likely outcome. Financial types seem to be the biggest fans of the 40% rule, but it can be useful for all manner of punditry. Roubini explained how he came up with that number here.

According to the article, are forecasts net useful?

Yes. They play a big part of the finance and economics landscape that no matter how often they are debunked, people will keep depending on and paying for them.

What happened to the S&P/Case–Shiller U.S. National Home Price Index in 2011? Calculate its return for that year. See:

It rose then fell at the end of the year.

Its return is 2.45%.

In hindsight, was Gary Shilling's prediction about the magnitude and direction of home prices in the U.S. for 2011 correct?

No it was not correct

Why do we follow and read forecasts?

We follow and read forecasts to be able to avoid losses and to be able to predict profits

Name at least one recent forecast that did not materialize (not necessarily business related)

The forecast that Hillary Clinton will win the last United States general elections.

According to Mr. Falkenstein what was the difference between the stated and the actual purpose of the economics department of some investment banks?

The purpose was to provide rationales for decisions already made, to serve as an excuse to have a get together which was different from the stated purpose.

Lastly, is the article optimist about the users of business forecasts?

Yes, it is. It lays out that forecasts are important and people will still tend to pay for them.

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