5 ms·

What if it is a Black Swan event that adversely impacts the price of gold? Isn't that the whole point about Black Swan events? (Or is my interpretation of prop

What if it is a Black Swan event that adversely impacts the price of gold? Isn't that the whole point about Black Swan events? (Or is my interpretation of prophet Taleb wrong?)

axelroze 5y ago
The central idea of the black swan is that impossible events, as in 6+ standard deviations from the mean in a Gaussian setting, are far more probable because the underlying distribution was not Gaussian but one similar to a power law distribution. The reason why these events happen is because humans simplify the world too much. I am an European. I see white swans my entire life. Hence black swans must not exist. Go to Australia. See black swans. Be shocked that statistics are essentially lies. Our (humanity's) current understanding of gold is that it is scarce, hard to produce and it is valued by other humans. Thus under this model gold going to 100000x or 0.00001x of its current price is next to impossible. If it did we would think it is a black swan event. But let's say someone out there finally learned the secret of alchemy and can flood the market with lots of gold making not scarce any more. For them the price tanking to 0.000001x is not a black swan but just business because they know the underlying reality. Also conversely if it turns out that only 0.0001% of the current gold supply is real while other is tainted in some way the price of the real could spike. It is all about information asymmetry (human vs human) and naive simplification (human vs nature). People usually buy gold to hedge against inflation of currencies. In a black swan case of alchemy this can be really bad but I guess someone at Palantir probably checked that the gold scarcity and demand is still a valid idea. Or not. People assumed the banks are good and we got 2007. Can't trust anyone.
- brailsafe 5y ago
  Could also just hop over to England and see black swans. Closer than you think.
anm89 5y ago
Then the bet doesn't payoff. Are you implying that only actions with 100% probability of pay off should be taken? Because otherwise it's not much of a counter to say "did you know it's possible that this might not work?"
karmakaze 5y ago
The earlier post headline was more clear: "Palantir bought $50M in gold bars in August as cash pile grows" Having too much of one thing puts one at risk of a black swan event.

What if it is a Black Swan event that adversely impacts the price of gold? Isn't that the whole point about Black Swan events? (Or is my interpretation of prophet Taleb wrong?)

axelroze 5y ago

The central idea of the black swan is that impossible events, as in 6+ standard deviations from the mean in a Gaussian setting, are far more probable because the underlying distribution was not Gaussian but one similar to a power law distribution. The reason why these events happen is because humans simplify the world too much. I am an European. I see white swans my entire life. Hence black swans must not exist. Go to Australia. See black swans. Be shocked that statistics are essentially lies. Our (humanity's) current understanding of gold is that it is scarce, hard to produce and it is valued by other humans. Thus under this model gold going to 100000x or 0.00001x of its current price is next to impossible. If it did we would think it is a black swan event. But let's say someone out there finally learned the secret of alchemy and can flood the market with lots of gold making not scarce any more. For them the price tanking to 0.000001x is not a black swan but just business because they know the underlying reality. Also conversely if it turns out that only 0.0001% of the current gold supply is real while other is tainted in some way the price of the real could spike. It is all about information asymmetry (human vs human) and naive simplification (human vs nature). People usually buy gold to hedge against inflation of currencies. In a black swan case of alchemy this can be really bad but I guess someone at Palantir probably checked that the gold scarcity and demand is still a valid idea. Or not. People assumed the banks are good and we got 2007. Can't trust anyone.

brailsafe 5y ago
Could also just hop over to England and see black swans. Closer than you think.

anm89 5y ago

Then the bet doesn't payoff. Are you implying that only actions with 100% probability of pay off should be taken? Because otherwise it's not much of a counter to say "did you know it's possible that this might not work?"

karmakaze 5y ago

The earlier post headline was more clear: "Palantir bought $50M in gold bars in August as cash pile grows" Having too much of one thing puts one at risk of a black swan event.