Search For Probabilities
Futures Magazine
Thinking in terms of probability is a central tenet of being a Superforecaster. Yet, when when it comes to projections, all too often forecasts are delivered in 30-second sound bites or a tweet. We reached out to EidoSearch, a forecasting firm that uses a patented pattern matching technology, to project event outcomes and find relationships in Big Data.
When examining data, EidoSearch President and Co-founder David Kedmey says investors should take a disciplined approach to discover a better understanding of future events.
“There are three questions: First, what does it mean to make an investment decision? Next, what’s the most likely outcome for an investment and what are the range of outcomes?” Kedmey says. “Finally, what is the probability of successful investment? That third question is the hardest to answer.”
EidoSearch aims to answer those questions and provides a deeper assessment of the ranges and probabilities of forecasts issued by Wall Street’s most prominent analysts in both 2015 and in 2016 (see “Range of outcomes,” page 23). Using a conditional probability assessment, investors can better understand the likelihood of a projection issued by a 30-year Wall Street veteran or your uncle who thinks that Apple stock is heading to $200 by the end of next year.
“The big idea is how to use a world of data,” says EidoSearch CEO and Co-Founder, Dr. Steven Zhang. “Our methodology is data-incident based modeling (DIB). Think about how people look at things.
For example, look at Apple stock. If you ask a series of questions—why people think a certain way—they will base it on past experience. They know if they have seen something before. From experience, they look at criteria and say that Apple should go here.”