UNCERTAINITY invites a SWAN :

All the shocks and extreme uncertainities i have been writing about in my previous blogs is a part of a larger realm, i.e uncertainity/ chance.
But there is the bell curve(normal distribution) and the stereotypical financial analysts and statisticians to deal with things falling under the bell. But mostly that seems to blow up situations are the events that are the outliers,i.e the events not covered under the bell curve. No matter how much less your beta is in your portfolio (designed by a stereotypical analyst) a Monday(black Monday incident, read my previous blog " Mother nature is also a Mother fucker") can just blow up all your plans and give you lakhs and millions of loss that may require years to recover.

So let me just deal with those.

Let's invite a little Swan in our picture.
A traditional swan is white . Untill Australia was discovered people in this world reacted in a way to black swans as if they were asked of green cheetahs (some of them still do tough).
Australia is the only place where the traditional swans(white ones) break it's trend. It's the only place that has black swans. The world got quiet a shock when encountered with something that was apparently out of the norm. Trust me, it is the same reactions that people face when encountered with any event that doesn't seem to follow the history/norm. Thus this happening of viewing a Black swan amidst too many White swans can also be induced in real life happenings/events where events out of the blue seems to create Black Swans(Rare events). Try to diss me in any way possible in my following explanations. These events(Black Swans) also follow certain characters:
1) They are totally unpredictable and unforeseen from before hand.
2) When these events happen they leave a massive impact(positive or negetive) within even such a short span of time.
3) People(or 'experts' as the world calls them) tend to justify it's happening AFTER THE FACT.
This is the basic structure of rare events that leave immense impacts on the world.
Now that I have described Black Swans , it will form the basis of understanding that from where these events generate and how we can create a mindset and hence society, that can be more robust toward rareness of events rather than falling from sky when it happens.
I will dig deep into the philosophy of Black Swans and it's generation in my next blogs.


Popular posts from this blog

BURN FROM IT OR LEARN FROM IT (Chaos getting Sorted) :

Image
You go to school, you study, get good grades, you take an office job in a company and you settle. This is the narrative of life most of the households have. Basically; the narrative of playing it safe and looking forward to a day where  ultimately all problems of your life gets settled (once you get a good paying job basically). Little do we realize that 'settling' in a true sense is actually not part of the game. The more we have the goal in our minds to settle the harder it would be to actually be secured in life. Then what's the answer? The answer is that you should stop seeing randomness and Uncertainty as a bad thing. You see, it's all the perception of things in our mind that brings suffering. If you take non-seurity as a part and parcel of your life then it won't seem that bothersome.  Something even better starts to happen when you stop assuming seurity, you LEARN FROM YOUR MISTAKES AND IMPROVE! You see, when you see black swans and randomness in general as ...
Read more

God knows everything, EXCEPT STATISTICS :

I'am pretty sure you are thinking that this guy is one cocky motherf***** . Well , I don't know about that ; but what I'm sure about is that god really doesn't know statistics just because it never needed to know statistics. Pause and ponder, why do we even need statistics in the first place? It's simple, because we are uncertain about the future and also unsure about situations and phenomenon around us that we don't understand ( don't have complete information about) .  E.g, we don't know what will be the exact height of a particular boy born in India by the time he reaches the age of 28. So we need statistical measures of central tendency,  dispersion and  probability to give our best possible 'estimate' ( you can also call it 'guess' or 'prediction') about what the boy's height most likely will be by the time he reaches the age of 28.  Now, try to take your feet into God's shoes for a second. It is omnipresent and omni...
Read more

In the land of the blind , the "less blind" is king:

Let's dive into two situations: A) You collected a random sample of 10 people from India and calculated the net worth of each individual. B) In this case you chose again 10 random men from India, but this time instead of calculating their net worth you calculated the height of each individual in feet. Now, buckelup your seat belts because we're going to do something interesting here. Let's pickup the tallest man in India ever(in records) and the wealthiest man in India ever(in records). Let's add the height of the tallest man to the sum total of all heights of the 10 randomly selected men in India. What do you think will happen? the height of the tallest man will form a very small percentage of the sum total of all heights of the 10 randomly selected men. But on the contrary if you add the net worth of the wealthiest man in the history of India, then that will form a huge percentage of the sum total of wealth of those 10 random men and most likely it will surpass the su...
Read more