richardhutnik said:
You overvalue foresight by people. Survivor bias, looking back at who made it, can bias you into think they were necessarily smarter. One can say YES to some degree, one can be moderately successful doing this. But the extremes, require a lot of things in place people have NO control over. They would require a long string of events to break right. On what I said, take the case of Wall Street. Are there not a LOT of smart people there? If so, then who did the financial markets get wiped out due to the housing meltdown? Too much risk, and the bills came due. Throw in follow of believed fooled-proof quantitative analysis and then factors break thr wrong way. Anyhow, this is a basis of what Hayek, and others wrote on the subject. A reason why you DON'T do planned economies is that people aren't smart enough to do them. There is WAY too much we don't know, that makes it too risky to see too far ahead. All this, just like buying lottery tickets, is due to luck. Fooled by Randomness and other Taleb books go into this in greater detail. Can one, by mostly skill, win at chess? Yes. But how about becoming a billionaire playing chess? Nope, there needs to be something like the Cold War to produce a climate which would make Bobby Fischer's ability to play chess captivate the world enough you can become wealthy playing chess. |
The financial markets got wiped out because of stupid people.
Not on Wal-street.
The derivitives market was based on the belief that there wouldnt be a nationwide housing bubble. Which was seen as an impossibility because the factors that cause the ups and downs of housing markets are local events.
The government, brilliant as they were decided to centralize housing values via lending acts and lowering housing insurance. This causes a nationwide bubble that busted.
A lot of smart people got out when Wallstreet crashesd too by the way. Denmark and Norway, two of the smartest governments, made a killing. As did a few other smart nations.
Also, it's not survivor bias. If 20 people say "I have this great idea, and people will love it" and they all follow the same steps and only one of them succeeds....
then they in fact were smarter and more perceptive, because they were the one who did have something everybody would want. The scenario they were in was not random.
Survivor bias is when you survive because a genocidal mad man has 9 bullets and 10 people to shoot.
Peoples purchasing habits aren't so random.
