The Perfect Forecast
A flawless forecast of yesterday. An executive boasts of a perfectly accurate forecasting system. Dr. Bayes asks to see the original predictions.
Behind the joke.
A forecast must be evaluated against the prediction recorded before the outcome was known. Replacing old predictions with revised ones erases the very record needed to measure accuracy. Retain time-stamped forecasts and evaluate them out of sample; otherwise an apparently perfect track record may simply be hindsight.
The transcript.
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Executive: Our new forecasting system has been right every single quarter!
Dr. Bayes: Extraordinary.
Dr. Bayes: Can I see the forecasts you made six months ago?
Executive: Of course!
Executive: We continuously replace our old forecasts with updated ones.
Dr. Bayes: You've mastered the art of predicting yesterday.