March Madness in January

*/By Rick Nason, PhD, CFA
Partner, RSD Solutions Inc/*

*/Follow us on Twitter/* [1]

I have had the material ready to write a blog about the inability of experts
to predict college sports and I was going to compare it to the inability to
predict risk events.  As my example I was going to use the results of the
pundits at predicting the outcome of the College football bowl season (in
case you are interested the prediction ability is the same as flipping a
coin).

As I sat down today to write the blogs for the week, I desperately looked for
something that would distract me and allow me to procrastinate yet again. 
And then it happened – I got a notice from the Wall Street Journal that
Warren Buffett (through Berkshire Hathaway) was backing a $1 Billion prize
for anyone who can fill out a perfect March Madness college basketball
bracket.

The sage of Omaha knows the odds against predicting the future are infinitely
small.  What he may not realize is that the number of people willing to try
may be almost equally infinitely large. 

The odds of predicting risks successfully are also infinitely small, but like
those who participate in an office pool for March Madness, the number who try
seems to be infinitely large.


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