Filed under: Rants and raves, Competitive strategy, Google (GOOG), Apple Inc (AAPL), Books, Sunday Funnies, Headline news, DJIA
The outcome of the Belmont Stakes where Massive Brown came in last instead of first is just one more example of the difficulty one has in making predictions. I know little about horse racing, and the only thing I know about the Triple Crown is that there has not been a winner in 30 years (and counting). As irony would have it, the winner of the Belmont was the 38-to-1 long shot Da Tara that went wire to wire.
This event stands out in my mind because I’m asked to predict future events on a regular basis (whether it makes sense or not) and because I’m in the middle of reading The Black Swan about randomness and uncertainty by epistemologist Nassim Nicholas Taleb. I highly suggest the book to fellow investors and business leaders interested in getting some perspective on risk and the many fallacies we all overlook.
The number of variables that can affect a specific outcome like a horse race are significant, and in the case of the Belmont Stakes, on this occasion something was amiss. When Big Brown turned for home, something wasn’t right. Jockey Kent Desormeaux knew the large bay colt was completed. Trainer Rick Dutrow Jr., who guaranteed racing’s first Triple Crown in 30 years, knew it, too.
Guaranteed? This reminded me of a story I posted earlier this year, Kiss of death: GOOG $2,000 & AAPL $300. The odds of a prediction coming true are greatly outweighed by it not. We are halfway through the year and Google Inc. (NASDAQ: GOOG), which shut at $567.00, and Apple Inc. (NASDAQ: AAPL), which shut at $185.64, are below their December highs where they’ve been all year. If these companies were to obtain these lofty price predictions then something we are not aware of this day will drive them forward.
“He was empty. He didn’t have anything left,” Desormeaux said. “There’s no popped tires. He’s just out of gas.”
That seemed to be the case with the stock market on Friday as the Dow Jones Industrial Average lost 394.64 points to complete at 12,209.81, down -3.13%.
Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. I do not any shares of AAPL, GOOG, Huge Brown or Da Tara.
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