Yogi Berra is probably more famous for his ‘Yogi-isms’ than his baseball achievements.

Sayings like ‘When you come to a fork in the road, take it’, and this gem ‘Always go to other people’s funerals; otherwise they won’t go to yours’.

But when it came to looking into the crystal ball, Yogi-isms actually made sense…in a quirky way.

‘It’s tough to make predictions, especially about the future.’


‘The future ain’t what it used to be.’

It’s because the future is not what it used to be, that it’s tough to make predictions about it.

At the start of this millennium, who would have predicted that Sears (a US retail icon for more than a century) would declare bankruptcy in 2018?

And back then, who would have thought that Sears demise would come, largely, from an online book seller (at that time) called…Amazon?

Once upon a time, a taxi licence was a great investment…been that way for decades.

Then along came Uber in 2009 (less than nine years ago) and that value has been all but destroyed. The final nail in the ‘taxi licence coffin’ is coming very soon. This is from The Guardian on 7 November 2018…

‘Waymo, formerly known as Google’s self-driving car, is launching a fully autonomous Uber-like ride-hailing service with no human driver behind the wheel, after testing the vehicles on public roads in Arizona.’

The rumour mill has it that Waymo (part of Google) may even offer free (or subsidised) rides in exchange for users agreeing to watch some ads during their journey.

The future definitely ain’t going to be what it used to be.

Therein lies the danger with extrapolating trends.

We fall into the ‘recentism’ trap.


The ‘recentism’ trap

What has been our recent experience, will be our future experience.

But that’s not be the story of human progress. Disruptors come along and change the game.

Printing press. Steam engine. Electricity. Telegram. Penicillin.

This is an extract from an article I wrote some time ago titled ‘Extrapolation is Horse S**t’

Over a century ago the world’s major cities had a serious problem — horse dung.

‘In 1898, delegates from across the globe gathered in New York City for the world’s first international urban planning conference. One topic dominated the discussion. It was not housing, land use, economic development, or infrastructure. The delegates were driven to desperation by horse manure.’

From Horse Power to Horsepower by Eric Morris

While this seems funny today, back then mounting piles of horse manure were anything but a laughing matter.

For centuries, horses were the mode of transport. As populations grew, so too did the number of horses, and with them the piles of manure.

The problem the city fathers faced in the late 1800s was not new. In Ancient Rome, Julius Caesar banned horse-drawn carts between dawn and dusk.

Between 1800 and 1900, the US population expanded by 30 million. More people meant more trade. More people and more trade meant more horses.

The railway did relieve some of the horse drawn transportation issues. However within the towns and cities, goods were still delivered by horse. Also the first public transport in New York was the Omnibus (carrying up to 120,000 passengers per day) pulled by a team of horses plus personal transportation was still by horse-drawn carriage.

In the wide-open spaces of Wyoming, the increase in horse numbers was not a problem. There was plenty of space for natural fertilizer out there. However, in densely populated areas like New York… it was a whole different matter. In New York, it was estimated that on a daily basis there was 1.8 million kilos of horse dung and 150,000 litres of equine urine to be ‘handled’.

Naturally, all this horse waste product became a pedestrian’s nightmare — especially when it rained. In addition to the obvious issue of dodging the ‘land mines’ there were serious health issues confronting the city administrators.

There is nothing like a dung pile to attract flies. The spread of typhoid and diarrhoea (especially among infants), increased mortality rates.

With this brief background, you can see why the 1898 urban planning conference had horse manure as the front and centre topic on its agenda. Apparently the meeting was scheduled to last for 10 days. After three days the meeting closed as no acceptable solution to the problem could be found.

The issues associated with too many horses had plagued Rome nearly 2,000 years ago and was such a long established trend the world’s town planners resigned themselves to it being an unsolvable problem.

According to Eric Morris:

‘The situation seemed dire. In 1894, the ‘Times’ of London estimated that by 1950 every street in the city would be buried nine feet deep in horse manure. One New York prognosticator of the 1890s concluded that by 1930 the horse droppings would rise to Manhattan’s third-story windows. A public health and sanitation crisis of almost unimaginable dimensions loomed.’

Based on the knowledge at the time — population growth and volumes of horse waste — you can appreciate the math behind the forecast of ‘pavements of poop’ piled up to the third floor.

The only horse poop in New York these days is around Central Park, where the horse and carriage rides await to take lovestruck and nostalgic tourists on an over-priced ride through the park.

The danger of extrapolating trends…

The ‘piles of poop‘ forecast is known as ‘extrapolation’ — taking an established trend and projecting it into the future. The problem with extrapolation is an unforeseen disruptor can change the trend. Making forecasts look silly to future generations.

In the case of the trend of mounting of horse poop, we know the advent of the combustion engine didn’t just change the trend, it killed the trend.

For example, in the late 1800s — based on the forecast trend of sky high ‘piles of poop’ — you are given an investment opportunity to buy shares in a business that has the monopoly on clearing the streets of New York of horse dung and then selling the dung as fertilizer. It’s likely the words ‘you can’t go wrong with this investment’ would come into your mind (and that of your friends).

Not only would the ‘poop collection’ business have eventually failed, the fertilizer business would also have run into trouble (according to Eric Morris’s paper):

‘Manure makes fine fertilizer, and an active manure trade existed in the nineteenth-century city. However, as the century wore on the surge in the number of horses caused the bottom to fall out of this market; while early in the century farmers were happy to pay good money for the manure, by the end of the 1800s stable owners had to pay to have it carted off.’

The risk with extrapolation is you are projecting forward an indefinite continuation of a trend. In reality, the only definite trend we can completely rely upon is the sun rising in the east and setting in the west.

Can you think of the one underlying trend that has been an absolute constant in all of our lives…one that we assume will continue indefinitely?


Everything is about growth.

Population. Economy. Business. Asset values. Employment. Wages.

Growth. Growth. Growth.

It’s repeated ad nauseum.

In the context of thousands of years of human progress, the pace of growth over the past 70-years is a fairly recent phenomenon.

Driven by demographics and debt.

But what if both of these factors are fatiguing…reaching a natural point of exhaustion?

What if we are heading for a period of disruption…when the debt-funded growth of the past is counteracted by a repudiation of debt by the next generation of consumers?

Be very careful about extrapolating the past into the future.

Things change and those investments you thought ‘you can’t go wrong buying’, suddenly go horribly wrong.

The volatility on Wall Street is a warning signal that disruption is on its way.


Vern Gowdie