![]() ![]() ![]() ![]() The human mind suffers from: (1) the illusion of understanding “a world that is more complicated (or random)” than understood (2) a perception of historical organization/causality that is clear only afterwards and, (3) the overvaluation of selected facts as filtered and interpreted by simplifying “experts.”.“It is easy to see that life is the cumulative effect of a handful of significant shocks.” This logic “makes what you don’t know far more relevant than what you do know.” Models that ignore this logic (such as those assuming Gaussian probability distributions for financial variables) inculcate mistakes that “can lead to severe consequences.” Focusing principally on the perspective of an investor, here is a chapter-by-chapter review of some of the insights in this book:Ĭhapter 1 – The Apprenticeship of an Empirical Skeptic In his 2007 book The Black Swan: The Impact of the Highly Improbable, Nassim Taleb addresses human inability to process natural randomness, particularly combinations of low predictability and large impact. ![]()
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