1/7
Day 7 & 8 & 9 Highlights of #RWRI17
▪️If something involves ruin, probabilistic estimates are worthless. 100 people playing Russian roulette exhibit different properties from one man playing 100 times. After 7 trials, the man might face the ultimate death risk.
@nntaleb
Day 7 & 8 & 9 Highlights of #RWRI17
▪️If something involves ruin, probabilistic estimates are worthless. 100 people playing Russian roulette exhibit different properties from one man playing 100 times. After 7 trials, the man might face the ultimate death risk.
@nntaleb
2/7
▪️Only one of the potential paths will be brought into actuality. If unsure what to do next, you should ask yourself: 'Do you want this again and innumerable times again? ' Would you accept this 'eternal return' for your portfolio?
▪️Only one of the potential paths will be brought into actuality. If unsure what to do next, you should ask yourself: 'Do you want this again and innumerable times again? ' Would you accept this 'eternal return' for your portfolio?
3/7
▪️People love to make money, and hate to lose money. To survive financial storms, one must overcome this humanness. Avoid immediate gratification. Sometimes, this is more difficult than trading itself.
▪️Risk management is far more important than revenue management.
▪️People love to make money, and hate to lose money. To survive financial storms, one must overcome this humanness. Avoid immediate gratification. Sometimes, this is more difficult than trading itself.
▪️Risk management is far more important than revenue management.
4/7
▪️Tail hedging means losing money most of the time. Sacrificing arithmetic return for the geometric return. Most investors don't understand systemic risks.
▪️Forecasting is borderline impossible. You should abstain from forecasting, unless you are Nancy Pelosi's husband.
▪️Tail hedging means losing money most of the time. Sacrificing arithmetic return for the geometric return. Most investors don't understand systemic risks.
▪️Forecasting is borderline impossible. You should abstain from forecasting, unless you are Nancy Pelosi's husband.
5/7
▪️Sharpe Ratio has created the false dichotomy: either low risk, low returns or high risk, high returns. With tail hedging, it is possible to increase your returns by lowering risk.
▪️Sharpe Ratio has created the false dichotomy: either low risk, low returns or high risk, high returns. With tail hedging, it is possible to increase your returns by lowering risk.
6/7
▪️The principal-agent problem will prevail as long as profits are shared between the financial manager and principal while losses fall on taxpayers and clients.
▪️The principal-agent problem will prevail as long as profits are shared between the financial manager and principal while losses fall on taxpayers and clients.
7/7
▪️Simple deterministic inputs+randomness🎲=complexity
▪️Rule 30 Cellular Automaton creates both well-organized and seemingly random patterns.
▪️It is impossible to predict the outputs of row 1001 without running all past 1000 rows.
@financequant @dzviovich
▪️Simple deterministic inputs+randomness🎲=complexity
▪️Rule 30 Cellular Automaton creates both well-organized and seemingly random patterns.
▪️It is impossible to predict the outputs of row 1001 without running all past 1000 rows.
@financequant @dzviovich
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