////////////////////////////////////////////BLACK SWAN IS PROBLEM OF THE IGN0RANT
/////////////////////The Turkey Problem
by Stephen Kinsella
Nassim Taleb gives a turkey as an example of relying too much on what you think you know to guide your behaviour in his book, The Black Swan. Imagine you’re the turkey. Each day, you get fed more than the last day, and your weight goes up, you feel healthier and happier, and life is good. A chart of your growth might look something like this:
The point is, if finance is just applied epistemology, and the people working in finance know this, why don’t they act accordingly? And why, in The Economist , can I read stuff like this and get all upset on a Sunday?
IN JANUARY 2007 the world looked almost riskless. At the beginning of that year I gathered my team for an off-site meeting to identify our top five risks for the coming 12 months. We were paid to think about the downsides but it was hard to see where the problems would come from. Four years of falling credit spreads, low interest rates, virtually no defaults in our loan portfolio and historically low volatility levels: it was the most benign risk environment we had seen in 20 years.
//////////////////////Chapter 4 brings together the topics discussed earlier in the narrative of a turkey. aleb uses it to illustrate the philosophical problem of induction and how past performance is no indicator of future performance. He then takes the reader into the history of Skepticism.
////////////////////Zoogles Are Not All Boogles
All zoogles are boogles.
You saw a boogle.
Is it a zoogle
NOT NECESSARILY
///////////////////OUT FRM EAST AFRICAN GREAT LAKES
//////////////////The term black swan comes from the ancient Western conception that all swans were white. Thus, the Black Swan is an oft cited reference in philosophical discussions of the improbable. Aristotle's Prior Analytics is most likely the original reference that makes use of example syllogisms involving the predicates "white", "black" and "swan." More specifically Aristotle uses the White Swan as an example of necessary relations and the Black Swan as improbable. This example may be used to demonstrate either deductive or inductive reasoning. However, neither form of reasoning is infallible since in inductive reasoning premises of an argument may support a conclusion but does not ensure it and similarly in deductive reasoning an argument is dependent on the truth of its premises. That is, a false premise can possibly lead to a false result, and inconclusive premises will also yield an inconclusive conclusion. John Stuart Mill first used the black swan narrative to discuss falsification.
/////////////////////I destroy my enemy when I make him my friend. -- Abraham Lincoln
/////////////////POST HOC RATIONALISATION
//////////////////PATTERN RECOGN-GIVES A DOPAMINE KICK
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Ironically the 17th Century discovery of black swans in Australia metamorphosed the term to connote an exception to the rule and the very existence of the improbable. Thus, the limits of the argument behind "all swans are white" is exposed - it is merely based on the limits of experience (e.g that every swan I have seen, heard, or read about is white). Hume's attack against induction and causation is primarily based on the limits of experience and so too the limitations of scientific knowledge.
///////////////////PARKINSON-DOPA -GOES ON BETTING SPREE-SUES DR
////////////////////WE ARE REDUCTIONISTS-NEED RULES TO REDUCE
/////////////////Higher frequency
Rare and improbable events do occur much more than we dare to think. Our thinking is usually limited in scope and we make assumptions based on what we see, know, and assume. Reality, however, is much more complicated and unpredictable than we think.
Also, assumptions relevant to average situations are less relevant to irregular situations, especially when the "rules of the game" themselves do change.
WIKIPDIA=
//////////////////Men, like nails, lose their usefulness when they lose direction and begin to bend."
– Walter Savage Landor
//////////////////////NARRATIVITY,CAUSALITY-DIMENSION REDN
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[edit]The huge effect
Extreme events do happen and have a big effect. Examples abound, including September 11th. The Internet with its various effects was scarcely anticipated, and it is a development that has had a significant effect. The effects of extreme events are even higher due to the fact that they are unexpected.
//////////////////Young men's knocks old men feel.
~Proverb, (English)~
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"In stillness and in silence I move beyond what I have considered my reality into boundlessness and limitlessness."
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