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View Diary: The Swan is still Black, and We're Still Screwed (212 comments)

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  •  Business cycles are perfect, Black Swans aren't (13+ / 0-)
    ... If you read Taleb's work, you know that most astute business analysts depend on standard Gaussian graphs, 200 day moving averages, simple regression analysis to make their predictions.

    The fact is, the world behaves differently. That's what Taleb's (a Phd. in Statistics) book is about.

    I am a fan of Bonddad's stuff, but Mish and the commenters on CalculatedRiskblog are more astute.  There is a huge gulf between just looking at a graph, and understanding what's really happening.

    This diary is very helpful in understanding what's really happening.  So is Bonddad's, but he doesn't account for anything beyond his graphs.

    Nice job.

    "If the Nuremberg laws were applied, every post WWII US President would have been hanged." =Chomsky

    by abenjaminc on Sat Jul 18, 2009 at 08:22:37 AM PDT

    •  Exactly (4+ / 0-)
      Recommended by:
      ATinNM, cappy, greenearth, phonegery

      I have used fat-tail analysis well before I knew anything about Taleb's book. Black Swans are events that occur in the "fat-tails" of probability distributions. The Pareto law of income distribution happens to be a fat-tail distribution but no one has actually derives how it comes about.  The fact that 20% of the people earn 80% of income in the USA is the Pareto Law, and everyone realizes this but it isn't a part of the "normal" Gaussian statistics.  Does anyone realize that Bill Gates is a Black Swan in terms of normal statistics?

      All of economics is built on these assumptions and they are really suspect in trying to 'splain anything.

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