VIEWPOINTS OF A COMMODITY TRADER

As most of my friends know by now I am a fan of Nassim Nicholas Taleb and his books “Fooled by Randomness” and “The Black Swan”. If you are an investor/trader I would highly recommend that you read these.

You don’t have to agree with everything, but it certainly pays to be aware of the impact of the highly improbable. He defines a highly improbable event (a black swan) as “one that is unpredictable; carries a massive impact; and, after the fact, we concoct an explanation that makes it appear less random, and more predictable.”

Part of the reason we do this is that as humans we are built more to learn specifics and focus less on generalities. We tend to rely much heavier on what we know as opposed to what we don’t know. I find it very interesting because instinctively I realize that what I don’t know about a subject, a company, or a commodity has to exceed what I do know. However, we are constantly fooled into thinking what we do know is significant. Good food for thought and remember……Expect the unexpected.

Below is a video of Nassim on CNBC’s Squawk Box.

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Filed under: Insights, Money Management, Trading Methods, Trading Psychology by Charles Maley
Tags: «Black Swan - Fooled by Randomness - Nassim Taleb - The Black Swan »