Do predictions differ from history? In 2023, we said goodbye to Charlie Munger, Warren Buffett's faithful "belt and suspenders," a man with a broad and down-to-earth intellect. Charlie had the ability to ask questions that brought a visionary and moral perspective. Regarding his prediction abilities, Charlie Munger said himself: "There is no better teacher than history in determining the future".
Why is history important?
But are we then able to describe history objectively and nuanced enough so that we can project it with reasonable accuracy, i.e., to predict?
In the book 1984, George Orwell wrote about history: “He who controls the past controls the future. He who controls the present controls the past.” By this, Orwell primarily meant that the way we describe the past depends on our goals today. Our bias thus influences our view of the past and, thereby, the outcome of the future.
Although the universe can be described quite precisely using mathematics, this does not mean that the future can be simply predicted by projecting the past. The 18th-century philosopher David Hume called this the problem of induction, as it pertains to determining the likelihood of a future event based on past observations. In doing so, we also assume that the laws of nature will continue as they have; otherwise, they would not be laws. This is what Bertrand Russell described in The Problems of Philosophy: if a chicken is fed every day at 9:00 a.m., it becomes a law in its mind—right up until the day the farmer chops off its head.
This theory thus collectively refutes Charlie Munger’s statement. The problem is just that few living people have come close to Charlie Munger’s ability to predict. He became (extremely) wealthy by hitting the mark time and time again.
Do we misunderstand the concept of history?
But is that because we misunderstand the concept of history? According to Yuval Noah Harari: "History is the study of change, not merely a description of the past."
”The best way to predict the future is to create it”. Abraham Lincoln
See also the following blog https://kraftscharling.dk/hvorfor-forudsige/