THINKER'S ALMANAC - October 12

How did Columbus combine knowledge and imagination when he and his crew faced starvation in 1504?

Subject:  Illusion of Skill - Elaine Garzarelli predicts Black Monday

Event: Black Monday, 1987 and Columbus Day

Wall Street’s favorite scam is pretending that luck is skill. -Ronald Ross

This is the story of two predictions that were made nearly 500 years apart.  Both predictions were correct; nevertheless, they both have something to teach us about the relationship between luck and skill.

The first was made on October 12, 1987.  Appearing on the CNN program “Money Line,” Elaine Garzarelli, a research analyst and money manager for Shearson Lehman Brothers, Inc., predicted "an imminent collapse in the stock market." Just four days later on October 16, 1987, the market did in fact suffer a major hit; it was so bad, in fact, that it became known as Black Monday.   Overnight, Garzarelli's seeming prescience made her famous.

Garzarelli’s subsequent predictions did not prove to be so prophetic; in fact, between 1987 and 1996 she was right just 38% of the time.  In other words, a person who based his predictions on the flip of a coin would have been more successful.  Eventually she was fired by her firm, Shearson Lehman (1).

A second prediction comes from Christopher Columbus, who on this day in 1492 came ashore on the island of San Salvador.  After his initial voyage to the “New World,” Columbus made three more.  On his fourth and last voyage in 1503, Columbus was marooned on the island of Jamaica when an epidemic of shipworms forced him and his crew to abandon their ships.

Columbus and his crew survived based on the benevolence of the native Arawak Indians who provided food and shelter.  However, after six months things became tense.  After half of his crew mutinied and attacked the Arawaks, Columbus needed to do something creative to assuage the anger of the Arawaks, who justifiably stopped providing food for his crew.

Image by David Pinder from Pixabay

Luckily Columbus had a copy of an almanac, which contained astronomical tables detailing the movements of the moon, planets, and stars. Studying his almanac, Columbus determined that a total lunar eclipse would occur on the evening of Thursday, February 29, 1504.

Columbus next scheduled a meeting with the Arawak chief three days before the eclipse.  At the meeting, Columbus explained to the chief that his act of cutting off the crew's food supply had enraged the Christian god.  As a result of the chief’s actions, in three nights the rising full moon would be replaced with a bloody, inflamed ball, displaying his god’s wrath.  

The Arawak chief might have been skeptical during his meeting with Columbus, but three days later, his skepticism was replaced by fear as the sun set, and he watched the moon emerging in the eastern horizon.  Just as Columbus predicted rather than a full winter moon, what he saw was an inflamed red ball in the eastern sky.  Terrified, the Arawaks packed up provisions and ran to Columbus’ camp, begging him to return the moon to normal.  

Columbus agreed to confer with his god, shutting himself in his cabin to consult his almanac so that he could time the stages of the eclipse.  About 50 minutes later, just minutes before the end of the total phase, Columbus came out of his cabin to announce that his god had granted a pardon to the Arawaks and that he would now return the moon to its normal state.  As if on cue, the moon gradually reappeared, emerging from Earth’s shadow.

Thankful for Columbus’ intercesion, the Arawaks continued to provide provisions for Columbus and his crew until help finally arrived from Hispaniola at the end of June 1504. 

The stories of Elaine Garzarelli and Christopher Columbus illustrate the illusion of skill, the belief that it is skill rather than chance or luck that accounts for the accuracy of predictions of things.  Because Garzarelli was correct about her prediction that Wall Street would collapse, many attributed her prediction to her skill as a Wall Street analyst;  most likely, however, she just made a lucky guess, especially when you consider her total record of predictions.

Columbus’ prediction of the eclipse was not a textbook example of the illusion of skill; nevertheless, it shows that knowledge truly is power and that knowledge coupled with imagination is a powerful combination.

Recall, Retrieve, Recite, Ruminate, Reflect, Reason: What is the illusion of skill and how did Elaine Garzarelli’s stock market prediction illustrate it?

Challenge -  Luck Vs. Skill: Research quotation on the relationship between luck and skill.  What is the one quotation that you think gives the best insight about the relationship between these two ideas? Explain why you think the quotation is profound.

Sources:

1-Dobelli, Rolf.  The Art of Thinking Clearly. New York:  Harper Paperback, 2014. 

2-Hersh, Julie. “How a Total Lunar Eclipse Saved Christopher Columbus.” Space.com. 12 Oct. 2014.