Unpredictability of Markets

There are 2 types of difficult problems:

  1. The type we could solve adding more talent, time, hard work and means.
  2. The type that, by its nature, is not possible to solve regardless of how hard we try.

Unfortunately, predicting the future of markets is a “type B” problem. Let’s see why markets are fundamentally unpredictable by its nature.

Predicting the markets is impossible

There are many ways to prove that forecasting the markets will be always impossible. One of my favorites is related to the Theorem of the impossibility of socialism developed by Mises, Hayek and Huerta de Soto. Briefly speaking, the theorem states that

My favorite, due to its simplicity and brevity, is derived from Mathematics itself (although also strongly linked to the aforementioned theorem).

(Work in progress…)