Re: OT: interesting global warming quote found elsewhwere

On Mon, 04 Aug 2008 03:20:52 +0100, Eeyore
<rabbitsfriendsandrelations@xxxxxxxxxxx> wrote:



John Larkin wrote:

John Popelish wrote:
Eeyore wrote:
John Popelish wrote:

You just summed up the fallacy that the book, "The Black
Swan" is all about.

Can you elaborate ?

I'll try. The book is all about how we pretend to be able
to predict the future based on inductive logic
(extrapolating from past experience), and how this falls
down in the presence of rare exceptions or "black swans"
(with rare being defined as outside recent memory or
education). It doesn't explain how to predict the
unpredictable, but how to avoid being a sucker by mistakenly
thinking you have predicted (quantified) risk but have not.

One of the common ways that people fool themselves into
thinking they have a grasp of future risk is to model the
past as a Gaussian process. But many processes, including
the stock market and business in general (the big exception
being gambling casinos), are more chaotic, or Mandelbrotian
rather than Gaussian. But you can perform Gaussian modeling
on long stretches of Mandelbrotian data between the
explosive exception parts and it looks like a good fit...
until the next blow up happens.

Experience is the worst teacher.

Fascinating.

I thought the stock market WAS a casino anyway.

Graham

In a casino, the house always wins. In the stock market, the biggest
institutions, loaded with economists and supercomputers, can't see the
train bearing down on them a month ahead of impact.

The impending real estate busts (in the US and UK) should have been
obvious. So should the big US carmakers have anticipated the death of
the gluttonous SUV.

So, are we headed for any upheavals in the technology biz?

John

.

Relevant Pages

  • Re: OT: interesting global warming quote found elsewhwere
    ... Swan" is all about. ... past as a Gaussian process. ... on long stretches of Mandelbrotian data between the ... explosive exception parts and it looks like a good fit... ...
    (sci.electronics.design)
  • Re: OT: interesting global warming quote found elsewhwere
    ... Swan" is all about. ... past as a Gaussian process. ... on long stretches of Mandelbrotian data between the ... explosive exception parts and it looks like a good fit... ...
    (sci.electronics.design)
  • Re: OT: interesting global warming quote found elsewhwere
    ... Swan" is all about. ... But many processes, including the stock market and business in general (the big exception being gambling casinos), are more chaotic, or Mandelbrotian rather than Gaussian. ... But you can perform Gaussian modeling on long stretches of Mandelbrotian data between the explosive exception parts and it looks like a good fit... ...
    (sci.electronics.design)
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