One of the most maligned professions when it comes to forecasts is meteorology. Nate Silver does and excellent job here, shedding some light on the challenges and triumphs of predicting the weather.[1]
Software engineering can involve difficult models about different scaling scenarios. Civil engineering might involve unexpected surprises about how standing waves emerge in bridge design. Financial analysis involves a forecast of the total revenue stream the company will generate between now and the end of time, and a guess about what other market players will predict about the future a quarter from now, since the stock price, too, can affect its income.
Take P/E ratios for example. Should you look at them as a sanity check, or think of them as a broad measure of the market's beliefs about the issue's future growth potential?
Regardless of where you stand, it is patently absurd to state that financial analysis is not data driven, and the decision making does not reward empirically successful results. Whether you recommend your fund bets with or against the market you get less of a say next time when you have less money left to bet, or decrease your assets under management by losing your clients' money.
Software engineering can involve difficult models about different scaling scenarios. Civil engineering might involve unexpected surprises about how standing waves emerge in bridge design. Financial analysis involves a forecast of the total revenue stream the company will generate between now and the end of time, and a guess about what other market players will predict about the future a quarter from now, since the stock price, too, can affect its income.
Take P/E ratios for example. Should you look at them as a sanity check, or think of them as a broad measure of the market's beliefs about the issue's future growth potential?
Regardless of where you stand, it is patently absurd to state that financial analysis is not data driven, and the decision making does not reward empirically successful results. Whether you recommend your fund bets with or against the market you get less of a say next time when you have less money left to bet, or decrease your assets under management by losing your clients' money.
[1] http://fivethirtyeight.blogs.nytimes.com/2012/09/09/why-weat...