Editor: Crass Cash
Humanity's ability to see patterns is one of our greatest skills. It's allowed us to see the changing of seasons before they happen. It's allowed for us to predict the migration of animals. It's allowed for agriculture.
However, this ability has a weakness. That weakness is randomness. There's even a book on the subject named FOOLED BY RANDOMNESS by Nassim Taleb, which I highly recommend. While we're good at picking up patterns and forecasting with them. We're not very good at recognizing when those patterns are part of a larger logical system or if they are simply random due to their complexity. In other words are we trying to predict the changing of the seasons, which are based upon simple astrophysics or are we trying to predict where and when a drop of rain will fall? Both are rooted in physics with one being highly predictable and the other being completely unpredictable.
What does this have to do with money?? Well what I'm referring to is the difference between predicting where the stock market will be in a politically stable country 30 years from now and what it'll do tomorrow. Do I know where the stock market will be 30 years from now? No, not exactly. I also don't know if an asteroid will destroy earth in the next 30 years. But I'm wiling to make a bet that the stock market will be a good bit higher and that the earth will still be around.
However, I'm not about to bet one penny on where a rain drop will land or whether the stock market will be lower or higher tomorrow. It's unpredictable, so don't waste your time or your money.
However, this ability has a weakness. That weakness is randomness. There's even a book on the subject named FOOLED BY RANDOMNESS by Nassim Taleb, which I highly recommend. While we're good at picking up patterns and forecasting with them. We're not very good at recognizing when those patterns are part of a larger logical system or if they are simply random due to their complexity. In other words are we trying to predict the changing of the seasons, which are based upon simple astrophysics or are we trying to predict where and when a drop of rain will fall? Both are rooted in physics with one being highly predictable and the other being completely unpredictable.
What does this have to do with money?? Well what I'm referring to is the difference between predicting where the stock market will be in a politically stable country 30 years from now and what it'll do tomorrow. Do I know where the stock market will be 30 years from now? No, not exactly. I also don't know if an asteroid will destroy earth in the next 30 years. But I'm wiling to make a bet that the stock market will be a good bit higher and that the earth will still be around.
However, I'm not about to bet one penny on where a rain drop will land or whether the stock market will be lower or higher tomorrow. It's unpredictable, so don't waste your time or your money.
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