3 ms·
Extreme events are always poorly priced in markets. For example, there's no point in making a trade for the S&P 500 falling by 90% because if it does we'll be i
by spacebanana7 7mo ago
Extreme events are always poorly priced in markets. For example, there's no point in making a trade for the S&P 500 falling by 90% because if it does we'll be in such a catastrophe that money doesn't matter any more.
Insurance / hedging is most useful in protecting you from realistic well defined risks that affect you personally but not the wider system.
- DeathArrow 7mo ago>Insurance / hedging is most useful in protecting you from realistic well defined risks that affect you personally but not the wider system. But a powerful earthquake can't affect the wider system in a country? and yet, people do buy insurances for earthquakes.
- spacebanana7 7mo agoPerhaps I should’ve said financial system plus some system that allows you to spend money on things you’d like.