ZeroHedge points out that JP Morgan has now taken out a $3 billion reserve to hedge against the potentially faulty judgments of their quantitative analysts.

For those of us in the world of largely qualitative analysis, this is a fairly unprecedented move, one that cuts across the grain of most schools of modern managerial thought. As my colleagues in intelligence often say, fake numbers will trump real insight almost every time. For example, consider that 87% of all statistics are made up on the spot to support faulty arguments. (Ahem.)

We’re not against hard numbers; collect as many of them as possible in every analysis. Still, you should be able to analyze the assumptions behind those numbers. Speaking of which, the ZeroHedge article pulls a shocking statistic out of the history of the subprime debacle. Check out what the quantitative model predicted subprime losses to be, as opposed to the actual losses, factors of 100 greater. Holy cats…

I might add, if you prefer real forecasting to fake numbers, we’re teaching a course on the subject around lunch time, March 4. Why not join the class?