19@@@@@@@@IL RISCHIO CONSUETO VA AUMENTATO CON IL RISCHIO ESISISTENZIALE
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one hundred people go to a casino
Note:ESP MENTALE
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assume that gambler number 28 goes bust. Will gambler number 29 be affected? No.
Note:GRUPPO E INDIVIDUO
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1 percent of the gamblers will go bust.
Note:IPOTESI
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One person, your cousin Theodorus Ibn Warqa, goes to the casino a hundred days
Note:ALTRO CASO
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On day 28 cousin Theodorus Ibn Warqa is bust. Will there be day 29? No.
Note:MORTE
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there is no game no more.
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100 percent probability of eventually going bust.
Note:ROVINA CERTA
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ensemble probability,
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time probability
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recommendations based on the long-term returns of the market, beware.
Note:INGANNO
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“in order to succeed, you must first survive.”
Note:PRIMUM VIVERE
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presence of ruin disqualifies cost-benefit analyses;
Note:CONTRO COSTI BENEFICI
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the severe mistake of missing the effect of the difference between ensemble and time.
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Mark Spitznagel and myself built our entire business careers around it.
Note:UN ERRORE CON CUI ARRICCHIRSI
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help investors eliminate uncle points
Note:L OBBIETTIVO
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worrying about the tails is “irrational.”
Note:L ASSURDO AVVISO DEGLI ECONOMISTI...PARLANO DEL GRUPPO NN DELL INDIVIDUO. SOLO I HA PROB. DI SOPRAVVIVENZA
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how come nobody for 250 years quite got it? Lack of skin in the game, obviously.
Note:PERCHÈ NN SI COMPRENDE UN IDEA TANTO SEMPLICE?
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ERGODICITY
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non-ergodic when observed past probabilities do not apply to future processes.
Note:ERGODICITÀ
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if there is a possibility of ruin, cost-benefit analyses are no longer possible.
Note:IL PROB. CENTRALE
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Assume a collection of people play Russian roulette
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ALTRO ES
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About five out of six will make money.
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one has an 83.33 percent chance of gains,
Note:METODO TRAD
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But if you keep playing Russian roulette,
Note:CIMITERO CERTO
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REPETITION OF EXPOSURES
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there is “statistical evidence that a plane is safe,” with a 98
Note:ESEMPIO
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benefit analyses
Note:DUE TIPI DI ANALISI...LA PRIMA
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tail risk analyses
Note:TIENE CONTO DELL'ASIMMETRIA: DA UNA PARTE C'è L'ESISTENZA, DALL'ALTRA NON SI GUADAGNA UNA VITA
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innate tendency to “overestimate” small probabilities.
Note:L ACCUSA A TALEB
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our ingrained daily life logic, which is remarkably more rigorous.
Note:MOLTO PIÙ RAGIONEVOLE L UOMO COMUNE
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Smoking a single cigarette is extremely benign, so a cost-benefit analysis would deem it irrational to give up so much pleasure for so little risk!
Note:PERCHÈ NN FUMARE UNA SIGARETTA?…ANALISI COSTI BENEFICI
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This idea of repetition makes paranoia about some low-probability
Note:È LA RIPETIZIONE NN LA QUANTITÀ
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Confusion arises because it may seem that if the “one-off” risk is reasonable, then an additional one is also reasonable.
Note:LA RAGIONEVOLEZZA NN SI SOMMA...CONFUSIONE
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The idea in social science of “loss aversion” has not been thought through properly—it
Note:LOSS AVERSION...ERRORE
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you cannot possibly ignore all the other financial risks he is taking:
Note:LO PSICOLOGO PRENDE IL RISCHIO DI LABORATORIO COME SE FOSSE L UNICO
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if he has a car parked outside that can be scratched,
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All these risks add up, and the attitude of the subject reflects them all.
Note:SOMMA TUTTI I RISCHI X SAPERE SE...
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The Thorp, Kelly, and Shannon school
Note:INFO TH
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agents increase their risks as they are winning, but contract after losses,
Note:STRATEGIA
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“playing with the house money.”
Note:NOME
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this dynamic strategy is deemed out of line by behavioral finance
Note:STRATEGIA CRITICATA DAI FINTI GURU
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the creepy interventionist Richard Thaler,
Note:TIPO...
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I believe that risk aversion does not exist: what we observe is, simply, a residual of ergodicity.
Note:TESI....PEE CHI HA LE MANI IN PASTA LE CODE ASIMMETRICHE CONTANO
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People are, simply, trying to avoid financial suicide
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WHO IS “YOU”?
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One of the defects modern education and thinking introduces is the illusion that each one of us is a single unit.
Note:NN SIAMO SOLI
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your death plus that of your children, nephews,
Note:LA COSA PEGGIORE CHE PUÒ CAPITARMINON È LA MIA MORTE
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how can your death be the worst possible outcome?*3 Unless you are perfectly narcissistic
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The precautionary principle,
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“we take risks by crossing the street,” so why worry so much
Note:LA SOLITA OBIEZIONE
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the risk of being killed as a pedestrian is less than one in 47,000 years,
Note:NUMERI
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my death is never the worst-case scenario
Note:MA
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COURAGE AND PRECAUTION AREN’T OPPOSITES
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How can both courage and prudence be classical virtues?
Note:NOTATA LA STRANEZZA?
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I can exercise courage to save a collection of kids from drowning,
Note:CORAGGIO X IL SINGOLO...PRUDENZA COLLETTIVA
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Courage is when you sacrifice your own
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Selfish courage is not courage.
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RATIONALITY, AGAIN
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reframed rationality in terms of actual decisions,
Note:IL REALE È RAZIONALE
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If superstition is what’s needed to satisfy ergodicity, let it be.
Note:ES SUPERSTIZIONE
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Warren Buffett.
Note:NN È DIVENTATO RICCO CON L ANALISI CB
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establishing a high filter, then picking opportunities that pass such a threshold.
Note:FISSARE UN CUSCINETTO DI SICUREZZA
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really successful people say no to almost everything,”
Note:PAROLE DI WB
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“say no” to tail risk.
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Whenever I hear someone saying “we need to take (tail) risks” I know it is not coming from a surviving practitioner but from a finance academic
Note:TIPICHE PAROLE DELL ACCADEMICO
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LOVE SOME RISKS
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I make the case for risk loving,
Note:ES
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risks that don’t have tail risks but offer tail profits.
Note:MA
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Risk and ruin are different tings.
Note:BAH
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NAIVE EMPIRICISM
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“Ebola is causing fewer deaths than people drowning in their bathtubs,”
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CONFUSIONE DI DUE EVENTI DIFFERENTI
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Never compare a multiplicative, systemic, and fat-tailed risk to a non-multiplicative, idiosyncratic, and thin-tailed one.
Note:REGOLA
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correlation between the death of one person and that of another.
Note:IL CUORE...CORRELAZIONE...FRAGILITÀ
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Mediocristan and Extremistan.
Note:DUE CATEGORIE DI RISCHIO
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Mediocristan is thin-tailed
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Extremistan has a systemic effect that Mediocristan doesn’t.
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Chernoff bound
Note:LA SICUREZZA DI MEDIOCRISTAN
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number of people who drown in their bathtubs
Note:ES MEDIO
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the doubling of the number of people killed by terrorism
Note:COSA BEN DIVERSA
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Your grandmother’s logic would debunk these claims.
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looks at things from the tail.
Note:ADVICE
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difference between processes for extremes,
