I made a great deal of money in the late 1940s on the bull side, ignoring Satchel Paige's advice to Lot's wife, “Never look back.” Rather I would advocate Samuelson's Law: “Always look back. You may learn something from your residuals. Usually one's forecasts are not so good as one remembers them; the difference may be instructive.” The dictum “If you must forecast, forecast often,” is neither a joke nor a confession of impotence. It is a recognition of the primacy of brute fact over pretty theory. That part of the future that cannot be related to the present's past is precisely what science cannot hope to capture.
—Paul Samuelson, February 1985 lecture at Trinity University
When I first started working as a forecasting economist at PaineWebber in 1980, my professional colleagues at the Fed and in academia were wary. How could I publicize economic forecasts when I knew how hard it is to be right even half the time? What would I do when I was wrong? Would I be fired? If so, could I ever get another job as a forecaster? More than three decades later I still am asked this type of question. Except now the typical query is, “How have you survived for so long in such a potentially precarious professional position?”
Part of the answer is that I have tried to apply, diligently, the same best practices that I have advocated throughout this book. Now, in this chapter, I review those practices and concepts, and I share with you some of ...