Diet books and predictions have in common they don't work very well. Barry Ritzholt, a columist for Bloomberg whom I often disagree with, put down a couple of interesting paragraphs about predictions which are very much in season, just like diet books. For the record, you can find mine here. I'll go over a couple of Ritzholtz points(emphasis mine):
People conceive of their own sense of self by making a number of reasonable albeit incorrect assumptions about the world. They often begin by pretending they know what is going on around them. People dislike uncertainty -- it forces them to acknowledge how little they actually understand about the complications of the world they live in. Recognizing these limitations is an unpleasant concession to many.
I've put in bold the one sentence I agree with. All the rest is sort of filler and I'm not buying it. I don't think it's all that clear WHY people don't like uncertainty. But we dislike it and will make unrational sacrifices to get it out of our head. This flaw is so strong in investing it has led Mohnish Pabrai to seek it out. Specifically he searches out situations where he believes others are confusing uncertainty and risk. Witney Tilson wrote up the example of Stewart Enterprises in the FT.
Philosophically, most people don’t like to admit the inherently random nature of life. This manifests itself in a variety of ways, but most typically it involves taking credit for successes but placing blame elsewhere for failures. Success, even though the credit for it should be attributed to coincidence or mere luck, is inevitably followed by overconfidence. Too often, what comes next are self-inflicted errors.
The important sentence here is the first one. With the exception of professional sports, in almost every field it helps a great deal to become aware of how random outcomes in real-life really are. One of the attractions of video games to me is how practice, effort and planning fairly predictably lead to good to great results. Don't take this as encouragement to stop strifing. It's more that the ambition to be nr.1 isn't always healthy or even optimal. For example; in investing I believe it to helpful to be ready, opportunistic, have a good process and work hard. But if you want to be nr.1 of your firm, your peer group or your fund class that will actually work against you.
Believing in predictions allows people to overlook their own ignorance, discount the role of randomness and generally overestimate their own skills. If you think you (or someone you pay) can divine the future, you create the illusion of control and stability, where often there is none. Order is created out of chaos; it is a comforting illusion.
There's some use to planning ahead. It just seems to be in our nature to be overly precise. A prediction sometimes leaves little room for alternatives. Instead we should think more about the impact instead of likelihood of various futures. How does your life or portfolio look in a number of circumstances? If you do fine under most circumstances but a hyperinflation scenario wrecks you, maybe that's an area you can improve. Often you can significantly improve on outcomes of low frequency events while giving up very little under business as usual circumstances.