We do the same in our roles as investors. We expect well-managed companies with good

products to make money and be valued accordingly. We assume companies that have the

money will service their bonds. We count on the economy to recover from slowdowns

and grow over time.

So most of our actions depend on extrapolation. Certainly in investing, we rely on

forecasts that assume the future will look a lot like the past. And most of the time they're

right. My main quibbles with forecasters are two:

1. While most forecasts call for a future that's a lot like the past, the truly valuable

forecasts are those that call for radical change. Forecasters rarely make such

forecasts, however, and those who do are rarely right.

2. Most forecasters present their work as deserving more credence than it does. In

short, they rarely say, "Here's my forecast, and if I were you, I'd take it with a

grain of salt."

Even today, forecasters are out there with predictions for the economy and the market that

are based primarily on history. And yet it seems to me that the future may be less likely

to look like the past than it has until now, and that things we've never even considered

before have a chance of happening.

Immediately after the attacks, there began to appear articles citing how long it has taken

the market to recover after past crises. But who's to say those precedents are at all

relevant? For example, I read that the market sagged for five months after Iraq's invasion

of Kuwait but made up all of that ground, and then some, soon thereafter. But that

experience had a very favorable outcome. We all want this one to be as good and as

quick, but are we willing to bet that it will?

We all want a feeling of assurance. We want to live in a world where the future seems

knowable and decisions that extrapolate normalcy can be depended on. We want to

believe life in this country will return to the carefree days pre-September 11. We want to

believe our leaders will be able to keep the ship upright and manage their way out of

problems. So I think we're eager to embrace predictions that these things will hold true.

But is it prudent today in making decisions regarding the future to assume a return

to the status quo?

The New Future – It seems to me that today we know even less about the future than we

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usually do, and that's never a lot.

1. About terrorism. How much of what we have to worry about stems from Osama

bin Laden and al Qaeda, and how much relates to other groups? How much of bin

Laden's plans and resources went into the September 11 attacks, and how much

remains on tap? Is bin Laden a diabolical genius against whom we're powerless,

or a paper tiger who got lucky? Are there additional shoes left to drop? Will

there be a high-profile attack once a year? Or will Middle East-style violence