Wednesday, November 30, 2011


Every morning I go for a brisk walk. In the quiet streets there is no cars to be seen anywhere except when I need to cross a road, inevitably a car will arrive at that very moment and want to turn.
This law of coincidence has puzzled me for a long time. The predictability of a random event. The convergence of two totally unrelated events in a particular moment in a particular place.
I think to myself, if such an event is so predictable, and this is only one example, why can't I wilfully make predictions that would benefit me financially?
Surprising that some of the best brains in finance have already ventured in this area, in fact Black and Scholes won the Nobel prize for their efforts. These guys even made huge profits when they applied their mathematical formula to finance and established a hedge fund called Long Term Capital Management.
I guess the predictability that these guys would eventually fail (as they did spectacularly) might be a lesson worth remembering.
Reference: The Ascent of Money by Niall Ferguson.

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