The Sydney Opera house is a fantastic example of our inability to predict. The budget was originally estimated at AUD 7M. It ended up costing AUD 102M

There's no such thing as a one-line-change

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2022-05-12 16:00:15

The Sydney Opera house is a fantastic example of our inability to predict. The budget was originally estimated at AUD 7M. It ended up costing AUD 102M. The project was finally delivered 10 years later and cost close to 14 times more than planned. Human beings are terrible at prediction.

Still not convinced? How about the fact that the entire mutual funds industry has historically performed worse than the benchmark portfolio?

However, the data shows that the vast majority of actively managed funds underperformed on this metric as well. Among domestic equity funds, while 90% have underperformed on the S&P Composite 1500 over the past 20 years, an even greater 95% did so on a risk-adjusted basis. (Source)

This is an entire industry of well-paid, highly educated professionals trying to predict which stocks will perform better than others. The data is crystal clear: they aren't any good at predicting.

Now stop and think about the predictions that you make on a daily basis. If you are a software engineer, chances are that you are being constantly asked to estimate the time it will take to deliver a given feature. How well would you score if there was a benchmark?

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