When an event such as the coronavirus pandemic hits markets, investor attention is inevitably drawn to the damage that can be wrought by high impact, unpredictable episodes. This is understandable as such occurrences can have disastrous financial consequences. I touched upon managing the risk of ruin in my post on ergodicity[i], and Morgan Housel recently…
The idea that something can be likely and not happen, or unlikely and still happen, is one of the world’s most important tricks. But let me tell you about a common problem. I’m as guilty of it as anyone else. It’s that most people understand probability, but few actually believe in it. Most people get that certainties…
In Alex Garland’s recent sci-fi TV series Devs, Silicon Valley engineers have built a quantum computer that they think proves determinism. It allows them to know the position of all the particles in the universe at any given point, and from there, project backwards and forwards in time, seeing into the past and making pinpoint-accurate forecasts…
Adam Robinson: Right. It’s so funny you should ask that, because people think stupidity is the opposite of intelligence. In fact, stupidity is the cost of intelligence operating in a complex environment. It’s almost inevitable. And so I was asked by an organizer of an investment conference in the Bahamas of some elite global investors…
Whilst it is difficult to see anything that is positive coming out of the COVID-19 pandemic in years to come we may look back and say at least we were spared Russia’s entry into the Eurovision 2020 Song Contest. What has been seen cannot be unseen……
Confirmation bias is our tendency to cherry-pick information that confirms our existing beliefs or ideas. Confirmation bias explains why two people with opposing views on a topic can see the same evidence and come away feeling validated by it. This cognitive bias is most pronounced in the case of ingrained, ideological, or emotionally charged views.…
Imagine we have a way back machine and we wander into your broker or financial planners office in 2007 and ask them to generate a portfolio for us. I can guarantee you that your portfolio will have at least two of the local big four banks in it. The argument for including them will include…
Whilst having lunch this headline from the Melbourne Age lobbed onto my screen. I was going to write a piece on narrative fallacies, false beliefs, postdictive errors, and general incompetence. You know all the usual stuff I go on about when I play whack-a-mole with analysts heads but I decided to opt for the old…
Few will have the greatness to bend history itself, but each of us can work to change a small portion of events. It is from numberless diverse acts of courage and belief that human history is shaped. Each time a man stands up for an ideal, or acts to improve the lot of others, or…
One of the things that has always interested me in humans is the desire to partition the world into little segments that are easy to understand, my view has always been that most of these dichotomies are false and are simply a mechanism of delineating groups into good and bad. Of course, everyone who splits…
In the South Seas there is a Cargo Cult of people. During the war they saw airplanes land with lots of good materials, and they want the same thing to happen now. So they’ve arranged to make things like runways, to put fires along the sides of the runways, to make a wooden hut for…
A little while ago I wrote a piece on whether adding information to a trading system increased its fidelity and in one of those happy little coincidences that sometimes occur in life the following arrived courtesy of Facebook.
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