The Practicalities of Predicting The Future

This post is part of an ongoing series of research updates by Bambu, a financial technology company I started in 2016. The theme of these posts is predicting the future. You can find part one here, sharing the results of a survey we ran about people’s attitude towards their future.

So, you think I’m kidding about predicting the future? Just hear me out. Predicting the future is not only possible, but even simple, if you stack the probabilities on your side by making precise statements about the object and time of the prediction.

Example 1: I predict everyone alive today will die. Certainly, there’s a non-zero chance I’m wrong, but historically that seems a pretty safe bet.

Example 2: Similarly, I can predict that for the next two seconds, you will continue to read this article, or at least finish this sentence. Got you!

So clearly you can predict many things as a party trick, by picking the right granularity of events and time horizon for the prediction.

The question is, where is the line between what’s defensible mathematically, and what’s actually new information that’s useful? If you’re too conservative, you end up with tautologies, i.e. statements that are obviously true but add no value or information besides a tired chuckle from the audience. If you’re too aggressive, then you’ll end up with highly interesting information that simply has no connection to reality, or at best is just a coin toss, and get dismissed as a charlatan.