“To the extent that the method of estimating future cash flow requires projections, I would say that projections, while they’re logically required by the circumstances, on average, do more harm than good in America. Most of them are put together by people who have an interest in a particular outcome. And the subconscious bias that goes into the process, and its apparent precision makes it…fatuous, or dishonorable, or foolish, or what have you. Mark Twain used to say a mine is a hole in the ground owned by a liar. And a projection prepared in America by anybody with a commission, or an executive trying to justify a particular course of action, will frequently be a lie. It’s not a deliberate lie, in most cases. The man has gotten to believe it himself. And that’s the worst kind…. Projections are to be handled with great care, particular when somebody has an interest in misleading you.”
—Charlie Munger.
