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There was an entire book about this that became famous during the 2008 financial crisis: Fooled by Randomness by Nassim Taleb https://www.amazon.com/Fooled-Ra

by chubot 4y ago

There was an entire book about this that became famous during the 2008 financial crisis: Fooled by Randomness by Nassim Taleb https://www.amazon.com/Fooled-Randomness-Hidden-Markets-Incerto/dp/1400067936/ref=asc_df_1400067936/ https://www.amazon.com/Fooled-Randomness-Hidden-Markets-Ince... It's literally about how options traders and the like can be lucky for 10 or 20 years, but they are actually idiots who destroy the economy. They think they are skilled, and others think they are skilled, but it's luck. You can also call it "anti-luck" because their short-term actions can cause the long-term crisis. This book was a #1 best seller, as were most of Taleb's books, but for some reason whenever I mention it to anybody, I get blank stares. I think it's just really hard for people to understand phenomena that occur at time scales of say more than a decade. (BTW Another good book about recurring economic cycles is Dalio's 2022 The Changing World Order. All of this stuff has happened before. This is separate from crypto, and relates to the global economic environment.)

tanseydavid 4y ago
This book was my introduction to Taleb and I loved it. I recommend it frequently.
lordnacho 4y ago
> whenever I mention it to anybody, I get blank stares. Maybe it's the circles you move in. In finance nobody hasn't heard of it. Well deserved reputation too, it really changed how I saw things. It's weird because even as someone who studied probability and stats, I hadn't thought it would change my entire worldview.
niyikiza 4y ago
Great book. It was my introduction to Taleb as well It profoundly shaped how I interpret markets and approach my own investments.
dibt 4y ago
>It's literally about how options traders and the like can be lucky for 10 or 20 years I don't see how doing anything successfully (in this case, gaining profit?) for 20 years can be described as "luck." Surviving/being successful that long trading isn't a fluke. I haven't read the book, but I know that Talib talks about 'tail risk' a lot and 'risk of ruin'. Which are very different than what you describe. If my bet size is only limited to 2%, I would be happy to be "lucky" for 20 years!
- catothedev 4y ago
  Example: sell attractively priced insurance against a 100-year-flood. You make money for 20 years, but then a crazy big flood bankrupts your insurance company. Who would have thought that would happen?! Options (and other things) can be structured to create 'catastrophic insurance like' outcomes.

by chubot 4y ago

tanseydavid 4y ago

This book was my introduction to Taleb and I loved it. I recommend it frequently.

lordnacho 4y ago

> whenever I mention it to anybody, I get blank stares. Maybe it's the circles you move in. In finance nobody hasn't heard of it. Well deserved reputation too, it really changed how I saw things. It's weird because even as someone who studied probability and stats, I hadn't thought it would change my entire worldview.

niyikiza 4y ago

Great book. It was my introduction to Taleb as well It profoundly shaped how I interpret markets and approach my own investments.

dibt 4y ago

>It's literally about how options traders and the like can be lucky for 10 or 20 years I don't see how doing anything successfully (in this case, gaining profit?) for 20 years can be described as "luck." Surviving/being successful that long trading isn't a fluke. I haven't read the book, but I know that Talib talks about 'tail risk' a lot and 'risk of ruin'. Which are very different than what you describe. If my bet size is only limited to 2%, I would be happy to be "lucky" for 20 years!

catothedev 4y ago
Example: sell attractively priced insurance against a 100-year-flood. You make money for 20 years, but then a crazy big flood bankrupts your insurance company. Who would have thought that would happen?! Options (and other things) can be structured to create 'catastrophic insurance like' outcomes.