For most of the World Cup game on Wednesday, the wisdom of crowds looked absent. Prediction sites gave England an overwhelming chance of beating the Democratic Republic of Congo. Yet the men in white were still behind until 74 minutes in. Earlier in the week, Germany had been favourites before losing to Paraguay and the Netherlands were unexpectedly defeated by Morocco.
Away from the football (don’t worry, this won’t take long), the consensus was dead wrong about a weaker dollar this year, too. Oil forecasters are also at sea. Meanwhile, despite US equity valuations at bonkers levels, investors are sanguine.
Where does wisdom go sometimes? Why do markets that supposedly aggregate the knowledge of millions of people — or even a few clever ones — repeatedly go awry?