[Son Sung-jin Column] The Lightness of Predictions

The purpose of making predictions is to anticipate the future and prepare for it. When a cold winter is forecast, manufacturers of winter products adjust their production volumes accordingly. There are scientific ways to predict the future, and there are astrological ones. Weather forecasts from the national meteorological agency are, of course, based on computer-driven scientific methods. Non-scientific divination belongs to the realm of astrologers, shamans, or so-called prophets.
Nostradamus, a medieval physician and astrologer, left a prophecy that the world would end in 1999, which, as we have already seen, turned out to be utterly false. According to his prophecies, this year a massive war will break out and many people will die, but we will have to wait and see whether that is true. The more complex and chaotic the times, the more fortune-telling tends to flourish. It is said that more young people are now turning to horoscopes and fortune-telling for fun. Yet no matter how lighthearted it may seem, this is by no means a healthy social phenomenon.
Amid ever-changing international politics and economic conditions, baseless predictions are spreading everywhere. Forecasts of annual growth or inflation are supposed to be grounded in scientific and statistical analysis to support policymaking. Governments and companies set their budgets and management plans based on such targets and projections. Even computer-based economic forecasts, however, frequently miss the mark. That is how difficult it is to predict the future. You can see this clearly in weather forecasting, even with the use of supercomputers.
Someone has claimed that the price of Bitcoin will rise to 1 billion won in Korean currency, whether as a prediction or a prophecy. That someone is Larry Fink, the CEO of the global asset manager BlackRock. He said this about a year ago, but reality has moved in the opposite direction. Around the same time, Robert Kiyosaki, author of "Rich Dad Poor Dad," loudly proclaimed that Bitcoin would go to 500 million won. When his forecast went wrong, Kiyosaki sold off the Bitcoin he held. He is now insisting that "the biggest stock market crash in history is imminent."
About ten years ago, there was a time when prophets of an apartment price crash were in vogue. They cited what they claimed were solid grounds and shouted that prices would collapse, but events unfolded in exactly the opposite direction. Their logic was that while apartment supply would continue, demand would fall because the population would shrink due to low birthrates. It turned out to be a completely wrong guess. They failed to foresee the explosive growth of single-person households.
People should not make casual predictions about apartment prices or Bitcoin prices. While anyone is free to make forecasts, there is a reason they should not be carelessly and publicly proclaimed with a loose tongue. Such predictions create victims. No matter how often forecasters add disclaimers that responsibility lies with investors or buyers, they pay little attention to the damage that results. No one compensates those losses. Many people, without even such disclaimers, speak with the confidence of prophetic seers and mislead ordinary citizens.
There must surely be people who believed the housing crash prophets and missed the right time to buy an apartment. If they are still in that situation today, who will compensate them, and how? And what about those who trusted the words of Larry Fink or Robert Kiyosaki and rushed to buy Bitcoin when it shot above 170 million won? Their losses are close to 50%.
As the stock market surges, agitators are buzzing around like moths to a flame. The government has floated 5,000 points on the Korea Composite Stock Price Index (KOSPI) as a sort of target, but few people truly believe it will be achieved. Those who were convinced this would happen and invested accordingly may well have made a fortune. Yet that is only a story told after the fact. If anyone could predict the direction of stock prices with even 70% accuracy, there would be no one left who was not rich.
The predictive power of securities firms, based on analysts’ research, is not impressive either. They are not really predicting; they are chasing. When stock prices fall, they lower their target prices, and when prices rise, they raise them. It has been the same with Samsung Electronics. They are no better than novice investors. Distrust of securities firms has existed for a long time. When a firm recommended a stock, its price would almost invariably fall. In some cases, firms recommended stocks while quietly selling off their own holdings.
We are now entering an era of stock investing. For the market to grow steadily on the basis of trust, as in the U.S. market, the rash prophets must disappear. Reckless, self-styled prophets with loose tongues need to show self-restraint, and securities firms must significantly improve their analytical capabilities. This is not a matter of "believe it or not."
Every time the share price of Samsung Electronics rises, countless figures are thrown around, and it is unclear whether they are predictions or targets. Even now, catchy slogans like "200,000 Samsung" and "1 million for certain chip stocks" are circulating, seducing those who still do not own shares. Ultimately, responsibility rests with the investor. But before that, the stock market must be made fairer and more transparent. Even if it is difficult under current law, we need to explore ways to regulate groundless, rumor-like predictions. That is the government’s responsibility.
tonio66@fnnews.com Editorial Director Reporter